At the beginning of the Covid pandemic, my close friend was let go from his position as Vice President at a large, well-funded startup. As a participant in the company’s Employee Stock Option Plan, or ESOP, he reasonably expected to walk away with a certain number of...
Technologists and tech investors are fond of saying “data is the new oil”. Often, they mean that data is the fuel that powers the new economy. But data and technology are also the new oil in another sense – they are the most strategic national assets of the 21st...
If you have raised venture capital in India in the past few years, you have surely asked yourself the question, “Should I be raising venture debt as well?”. Venture debt, as the term suggests, is a form of risk financing through debt rather than equity. In India, it...
Like many people in business, I learned negotiation during my MBA. I took a very popular and highly enjoyable class on the topic and learned a variety of concepts and techniques for successful negotiation. Soon I was estimating the “BATNA” (best...
A version of this article was published in Mint on September 3, 2018 Through the tumult of the past few decades, one fixture has remained constant on Indian roads – the humble motor scooter. From the elegant Lambrettas of the 1960s our grandfathers rode, to the...
The Company and the Founders shall complete an initial public offering or a ‘strategic sale’ within 5 years from the Closing Date (“Exit Date”) on terms that are acceptable to the Investor. The failure of Company and Founders to provide an exit by the Exit Date shall not relieve the Company / Founders of their obligations to provide an exit to the Investor, which shall continue until the Investor ceases to hold any shares. In case of failure to provide exit, the Investor shall inter-alia have a drag along right on all other shareholders of the Company.
Liquidation Preference
Higher of 1x or pro rata entitlement on an as-if converted basis in any liquidity event. Liquidity event shall be defined in the definitive documents and will inter alia include change in control or sale of substantially all of the assets of the Company.
Pre-Emptive Rights
The Investor shall, in any subsequent offering of securities by the Company, have a right to maintain their shareholding in the Company. [Note to Draft: Any super pro rata rights will be over and above this and should be included here]
Valuation
The valuation section concerns what an investor believes the company is worth. valuation issues addressed in the term sheet will include: pre-money valuation, post-money valuation, capitalization table and price per share.
