Governance and Control Terms
The terms sheet contains several investor rights relating to Governance and Control.\xa0 Here are three of them: \xa0Right of First Refusal\xa0 \xa0The Right of First Refusal clause says that if a founder sells his or her shares, then the preferred share investor gets the right to buy those founder shares first. Doing so results in increasing the investor\u2019s equity ownership in the company. Participation Rights This clause says that if the startup company sells shares to raise more funding, the current investors have the right to buy the shares first.\xa0 Registration Rights If the startup registers its stock on the public markets, then the startup must also register the investor stock shares and pay the legal fees for it. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let\u2019s go startup something today!