Deal terms look different in a downturn. Here’s what to watch out for

Published by
Peter Kavinsky

The last decade has been pretty friendly to startup founders at the deal table. Term sheets got shorter and deals became less structured. Capital was abundant, the exit window wide open and the outlook strong. Who needs dilution protection when the market is steadily going up and to the right?

Now, with a more volatile market, investor money isn’t flowing as freely, and deals are going to start to look very different.

Amid the uncertainty, some VCs are likely looking to introduce language into term sheets that help derisk their investments if market conditions continue to sour.

For someone like Stephan Osborn, a member at Mintz law firm with experience in the last two startup downturns, many of these investor protections will be nothing new. However, many current venture investors and founders weren’t in this industry a decade ago and may find themselves in unfamiliar territory.

Here are some things founders should keep in mind as they look to raise in a changed market — one in which they may have less leverage.

Liquidation preference

While not all potential risk protections will prove economic in nature, many will be. One area Osborn predicted will start coming up more is liquidation preferences.

Source: TechCrunch

Peter Kavinsky

Peter Kavinsky is the Executive Editor at cablefreetv.org

Share
Published by
Peter Kavinsky

Recent Posts

  • News

VAR of Alanyaspor – Beşiktaş match has been announced

News Besiktas News VAR of Alanyaspor - Beşiktaş match has been announcedBeşiktaş will be a…

1 min ago
  • News

TMO starts buying hazelnuts on 22 August

Starting to buy hazelnuts on August 22 TMO purchased 77 thousand tons from 50 thousand…

2 mins ago
  • News

2022 Vermont High School Football Scores

Click Here to Watch this High School Football Live Online for Free! Recent 2022 Vermont…

7 mins ago
  • News

Babiš talks like Putin, Adamová said. You are running an anti-campaign, says Schillerová Huis

<!----> According to Pekarová Adamová, Andrej Babiš needs to change the way he speaks to…

8 mins ago
  • News

Crafton: PUBG Attracts 80K New Players Every Day Since Switching To F2P – DTF Games – DTF

Krafton: PUBG Attracts 80,000 New Players Every Day Since Switching To F2P Model - DTF…

12 mins ago
  • News

Russia does not pay reservists and “volunteers” fighting in Ukraine

The Russian authorities do not pay reservists and members of "volunteer units" for participating in…

13 mins ago