Startup Funding Espresso -- Diligencing the Terms
Diligencing the Terms\xa0 Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In diligencing the startup\u2019s term sheet, check the following points: Is the valuation or cap rate appropriate for the stage of the company?\xa0 If it\u2019s out of line, then other terms such as liquidation preferences may be needed. What dilution will the investors go through, such as options pools and follow-on funding? It\u2019s important to understand who pays for the options pool -- the founders, the investors, or both. What rights do the investors have over employee compensation, follow on funding, exits, and other major decisions? The investors need a say in how the company is managed with regards to compensation and raising additional capital.\xa0 What rights do the investors have for participating in future rounds of funding? For the deals with big return potential, the investors need the right to participate in follow-on rounds. Are there any redemption rights or dividends in the deal by other investors? It\u2019s important to know what rights other investors may have over the company\u2019s cash. Check these points and how they will impact the return. 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. ___________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0 For Feedback please contact info@tencapital.group\xa0\xa0 Please , share, and leave a review. Music courtesy of .