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Actually high valuations tend to be correlated with clean terms. Which is not surprising since both reflect founders having power relative to investors.
by pg 14y ago
Actually high valuations tend to be correlated with clean terms. Which is not surprising since both reflect founders having power relative to investors.
- cududa 14y agoI think this is a fallacy. In my experience of the big firms law firms have already developed very clean convertible notes, and there are many that are public, leading to a larger trend in easy terms. By having an entrepreneur friendly first investor (not necessarily lead) agreeing to "clean terms" (independent of valuation), it seems most other investors in a round come on with little friction, even if it might require a call from one of your existing investors/ commitments.
- garry 14y agoIn practice, investors are either pretty upstanding, or kind of dirty. Upstanding investors tend to get the pick of the best because the best companies can choose who they want to do business with. Investors downstream tend to try to overreach on participating preferreds, pro ratas, and lower valuations. It's just how it seems to work.