Venture deals Be smarter than your lawyer and venture capitalist

Brad Feld

Book - 2011

"An engaging guide to excelling in today's venture capital arena. Beginning in 2005, Brad Feld and Jason Mendelson, managing directors at Foundry Group, wrote a long series of blog posts describing all the parts of a typical venture capital Term Sheet: a document which outlines key financial and other terms of a proposed investment. Since this time, they've seen the series used as the basis for a number of college courses, and have been thanked by thousands of people who have used the information to gain a better understanding of the venture capital field. Drawn from the past work Feld and Mendelson have written about in their blog and augmented with newer material, Venture Capital Financings puts this discipline in perspecti...ve and lays out the strategies that allow entrepreneurs to excel in their start-up companies. Page by page, this book discusses all facets of the venture capital fundraising process. Along the way, Feld and Mendelson touch on everything from how valuations are set to what externalities venture capitalists face that factor into entrepreneurs' businesses. Includes a breakdown analysis of the mechanics of a Term Sheet and the tactics needed to negotiate. Details the different stages of the venture capital process, from starting a venture and seeing it through to the later stages. Explores the entire venture capital ecosystem including those who invest in venture capitalist. Contains standard documents that are used in these transactions. Written by two highly regarded experts in the world of venture capital. The venture capital arena is a complex and competitive place, but with this book as your guide, you'll discover what it takes to make your way through it"--

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Subjects
Published
Hoboken, N.J. : Wiley c2011.
Language
English
Main Author
Brad Feld (-)
Other Authors
Jason Mendelson, 1971- (-)
Item Description
Includes index.
Physical Description
xx, 219 p. ; 24 cm
ISBN
9780470929827
  • Foreword
  • Preface
  • Acknowledgments
  • Introduction: The Art of the Term Sheet
  • 1. The Players
  • The Entrepreneur
  • The Venture Capitalist
  • The Angel Investor
  • The Syndicate
  • The Lawyer
  • The Mentor
  • 2. How to Raise Money
  • Do or Do Not; There Is No Try
  • Determine How Much You Are Raising
  • Fund-Raising Materials
  • Due Diligence Materials
  • Finding the Right VC
  • Finding a Lead VC
  • How VCs Decide to Invest
  • Closing the Deal
  • 3. Overview of the Term Sheet
  • The Key Concepts: Economics and Control
  • 4. Economic Terms of the Term Sheet
  • Price
  • Liquidation Preference
  • Pay-to-Play
  • Vesting
  • Employee Pool
  • Antidilution
  • 5. Control Terms of the Term Sheet
  • Board of Directors
  • Protective Provisions
  • Drag-Along Agreement
  • Conversion
  • 6. Other Terms of the Term Sheet
  • Dividends
  • Redemption Rights
  • Conditions Precedent to Financing
  • Information Rights
  • Registration Rights
  • Right of First Refusal
  • Voting Rights
  • Restriction on Sales
  • Proprietary Information and Inventions Agreement
  • Co-Sale Agreement
  • Founders' Activities
  • Initial Public Offering Shares Purchase
  • No-Shop Agreement
  • Indemnification
  • Assignment
  • 7. The Capitalization Table
  • 8. How Venture Capital Funds Work
  • Overview of a Typical Structure
  • How Firms Raise Money
  • How Venture Capitalists Make Money
  • How Time Impacts Fund Activity
  • Reserves
  • Cash Flow
  • Cross-Fund Investing
  • Departing Partners
  • Fiduciary Duties
  • Implications for the Entrepreneur
  • 9. Negotiation Tactics
  • What Really Matters?
  • Preparing for the Negotiation
  • A Brief Introduction to Game Theory
  • Negotiating in the Game of Financings
  • Negotiating Styles and Approaches
  • Collaborative Negotiation versus Walk-Away Threats
  • Building Leverage and Getting to Yes
  • Things Not to Do
  • Great Lawyers versus Bad Lawyers versus No Lawyers
  • Can You Make a Bad Deal Better?
  • 10. Raising Money the Right Way
  • Don't Ask for a Nondisclosure Agreement
  • Don't Email Carpet Bomb VCs
  • No Often Means No
  • Don't Ask for a Referral If You Get a No
  • Don't Be a Solo Founder
  • Don't Overemphasize Patents
  • 11. Issues at Different Financing Stages
  • Seed Deals
  • Early Stage
  • Mid and Late Stages
  • Other Approaches to Early Stage Deals
  • 12. Letters of Intent-The Other Term Sheet
  • Structure of a Deal
  • Asset Deal versus Stock Deal
  • Form of Consideration
  • Assumption of Stock Options
  • Representations, Warranties, and Indemnification
  • Escrow
  • Confidentiality/Nondisclosure Agreement
  • Employee Matters
  • Conditions to Close
  • The No-Shop Clause
  • Fees, Fees, and More Fees
  • Registration Rights
  • Shareholder Representatives
  • 13. Legal Things Every Entrepreneur Should Know
  • Intellectual Property
  • Employment Issues
  • State of Incorporation
  • Accredited Investors
  • Filing an 83(b) Election
  • Section 409A Valuations
  • Authors' Note
  • Appendix A. Sample Term Sheet
  • Appendix B. Sample Letter of Intent
  • Glossary
  • About the Authors
  • Index