Which three key assymetries between principal and agent are described between the two acteurs in VC?
What 6 (11) categories can be covered by the control Terms?
What are the theoretical reasons for ratchets?
What is a common handling of investors to implement bonus or malus agreements?
Allowing investors to _____
One way to implement ratchets is a bonus or malus agreement. This agreement allows investors to convert debt into stock at predefined objectives.
Situation: Value of the startup-company, post-money: $24mn. The Venture capitalist invests $6mn, $4mn as stock and $2mn as convertible debt, tied to milestones (ratchet). The milestones were not reached. What happens to the VCs equity stock?
The VC's equity stock increases from 16.6% (4/24) to 25% (6/24)
Another way to implement ratchets
What are drag-along rights? What is the logical result for the different participants?
What is commonly understood by tag-along-rights and who is profiting by those rights?
Theory perspective:
Why drag-along and tag-along-rights?
What are Protective Provisions?
List up actions for the founder regarding protective provisions!
The theory perspective:
Why protective provisions?
Redemption rights:
What is it targeting at? Who is it for?
+
Usually _____
Sometimes in case of _______
Why redemption rights?
Board representation:
What is the typical size of an early and later stage Board?
Why board representation?
Confidentiality and Exclusivity:
What is meant by those things?
Conditions precedent:
Prevent the investment from proceeding if ______? List up three!
Which conditions need special attention? List up three!
Punkt 3: employment agreements signed by founders still need to be accepted by investors
With what can the term sheet be transformed into a binding contract?
As a founder you have to sign what (has to do with the situation that you could step back from the company)?
Who pays monitoring and transaction costs and why?
Comprehension slide:
What are the key terms, conditions and rights? List up the contratcional element, the addressed content and the potential effects or hazards!
Theory Perspective and comprehension slide:
List up the VC-sided problems and measures
Comprehensional slide:
Drawing attention to the VCS rational…. List up the four elements the VC has to take into account with his rational!
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