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2x Participating Liquidation Preference

Yes the term sheet had this! So somehow Jasmine and I had to wiggle our way around this and convince the founders that there was a justifiable reason for putting in a 2x Participating Preference. We secretly wanted to push for 1x Non-participating but the founders ended up settling for 1.5x Partcipating, which is quite bad for them.

Board Seats and Control

The next big discussion was around Board Seats and Control. The founders brought an interesting point out that they would not like to see a lot of “Control” over them by putting in a big board of 4 people and would prefer a simple 2 founder board as had existed.

Founder Vesting

This is an interesting topic. Michelle and Rosalind (the founders) came back saying they would like full vesting upfront. This was not acceptable to the investors, both in the role play and in real-life as well.

Full Ratchet Anti Dilution

This was obviously a big no-no and even though we did not get time to negotiate this, both Jasmine and I wanted to go to a Broad-based weighted average anti-dilution clause.

Other points

This came up from one of the audience member where he said that it’s a bad idea to give any investor a veto right and it just puts complete control in the investors’ hands. I think this is false.

Tips

So this was most of what we covered over the two hours. But before I leave you, just some tips here on how to go about negotiating your round.