As investors, we are asked several times a month – “How do you decide which start-up to invest in?”. Despite the universal truth that the market trumps everything else, we all invest first and foremost behind great teams, market be damned. However, we usually fail to...
“Indians are an opinionated lot” – so much so that Mr. Narendra Modi made ‘Chai pe charcha’ as the key publicity drive of his last election campaign. But you don’t need to take anyone’s word for it – you just need to attend an Indian wedding or visit the...
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...
By Ashu Garg Founders rarely start companies because they want to manage people or scale teams. In fact, many founders have never managed people and don’t really want to do so. At the same time, most founders do want to be the CEO for as long as possible; because the...
Opened a bank account recently? After those visits from bank representatives and the endless back & forth on countless documents, did you feel frustrated? Did you wonder that in this era of instant gratification, with services & products always a few clicks...
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.