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Ask HN: VC funding milestones - are they normal?
Hi - our company is in talks with a VC - we don't have a term sheet or anything, but they've mentioned milestones as part of what we could expect. I don't have details on it - but was wondering if that was normal or not?
thx.
- maxdemarzi 17y agohttp://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/ http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-in... Basically, it's "normal" but not really great for you. More about downside protection for the VC, so they can cut their losses. Also as you reach these milestones, your company should be worth more (since you created value), but by doing this the VC sets the price for the future milestone based investment tranches at the lowest price (zero milestones reached).
- goodgoblin 17y agoThank you! They have also mentioned 'redemption' and 2x preferred stock - both of which kind of ring bells.
- cperciva 17y agoSome VCs try to negotiate tranches. Based on how rarely this comes up, I suspect they're a rather small minority. The right answer is probably "We're negotiating our first round of funding right now. We'll negotiate our second round of funding later."