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How valuable are these non-vanilla terms to investors? Presumably you can get anyone to commit to vanilla terms for the right price. Then it's just a question o
by peripitea 16y ago
How valuable are these non-vanilla terms to investors? Presumably you can get anyone to commit to vanilla terms for the right price. Then it's just a question of making big investors care less about these terms (e.g. by repeatedly demonstrating that investments can succeed without them), or taking more investments from people who put a lower premium on the terms (e.g. super angels).
- grellas 16y agoA thoughtful analysis by a knowledgeable lawyer (Yokum Taku of WSGR) of various seed-stage terms and their use in standardized sets of financing documents appears here: http://www.startupcompanylawyer.com/2010/03/14/how-do-the-sample-series-seed-financing-documents-differ-from-typical-series-a-financing-documents/ http://www.startupcompanylawyer.com/2010/03/14/how-do-the-sa.... As appears from his useful chart comparing the various standard sets, investors (and lawyers) just have different ideas of what they regard as important for different types of investments. Jason Mendelson, a well-known lawyer-turned-VC, took this further in a piece entitled "Why There Will Never Be a Standard Set of Seed Documents" (http://www.jasonmendelson.com/wp/archives/2010/03/why-there-will-never-be-a-standard-set-of-seed-documents-a-k-a-why-brad-feld-will-fail.php http://www.jasonmendelson.com/wp/archives/2010/03/why-there-...), in which he gets into more details about how people differ on what protections and terms to seek when making early-stage investments.
- chris123 16y agoWith respect to this this article, what would be helpful would be some links to actual convertible notes with caps and other provisions mentioned in his piece. Anybody have anything to share with the community?