Recommended
More Related Content
What's hot
What's hot (20)
Similar to Points to negotiate with investors by entrepreneurs / start-ups
Similar to Points to negotiate with investors by entrepreneurs / start-ups (20)
Recently uploaded
Recently uploaded (20)
Points to negotiate with investors by entrepreneurs / start-ups
- 1. SAMEER RASTOGI Managing Partner September 2016 POINTS TO NEGOTIATE WITH INVESTORS BY ENTREPRENUERS / START- UPS INDIA JURIS International Law Firm www.indiajuris.com
- 2. 2 POINTS TO NEGOTIATE - SUMMARISED 1. Tranches of Investment 2. Kind of instrument 3. Board Representation 4. ESOP Pool 5. Non-Compete / Non Solicitation 6. Anti-Dilution 7. Transfer of Shares 8. Liquidation Preference 9. Reserve Matters 10.Liability 11.Information Rights INDIA JURIS
- 3. 3 TRANCHES OF INVESTMENT - LESS is GOOOOOD Should aim for Single Tranche or keep the number of tranches to minimum. 1 2 3 POINTS TO NEGOTIATE WITH INVESTORS INDIA JURIS
- 4. KIND OF INSTRUMENT 4 INDIA JURIS • • Equity Preference (CCPS) POINTS TO NEGOTIATE WITH INVESTORS
- 5. 5 INDIA JURIS BOARD REPRESENTATION (Director / Observer) POINTS TO NEGOTIATE WITH INVESTORS
- 6. 6 INDIA JURIS ESOP POOL CREATION (Dilution & What %) Generally Investor will ask to create 10% of ESOP pool. Should clear further dilutions ESOP Pool Dilution Investors Founders Founders Equity Get Diluted after ESOP Pool creation POINTS TO NEGOTIATE WITH INVESTORS
- 7. 7 INDIA JURIS NON COMPETE / NON SOLICITATION Not only Founders, Investor should also observe Think about your other ventures, if any Define Competition POINTS TO NEGOTIATE WITH INVESTORS
- 8. 8 INDIA JURIS POINTS TO NEGOTIATE WITH INVESTORS FULL RATCHET (Pro-Investor) WEIGHTED AVERAGE (Founder friendly) ANTI- DILUTION
- 9. TRANSFER OF SHARES 9 INDIA JURIS Founders Lock in Right of First Refusal (ROFR) Right of First Offer (ROFO) Drag along right Tag along right POINTS TO NEGOTIATE WITH INVESTORS
- 10. 10 INDIA JURIS LIQUIDATION PREFERENCE How many X Participatory / Non- Participatory Defining Liquidation event POINTS TO NEGOTIATE WITH INVESTORS
- 11. • RESERVED MATTERS • Issue of further shares • Payment to key employee • Amendment in MoA/Aoa • IPO • Material contracts • EXIT • Sale • Merger & Takeover • Swapping • IPO 11 Reserved Matters • Issue of further shares • Payment to key employee • Amendment in MoA/AoA • IPO • Material contracts • The list goes on……….. POINTS TO NEGOTIATE WITH INVESTORS INDIA JURIS
- 12. 12 POINTS TO NEGOTIATE WITH INVESTORS LIABILITY accept no personal liability INDIA JURIS
- 13. 13 POINTS TO NEGOTIATE WITH INVESTORS INFORMATION RIGHTS Limited investor’s information right “IR” Till when Investor should have IR Conditions on sharing of IR by investors INDIA JURIS
- 14. 14 THANK YOU For any queries on the subject, please write to us as srastogi@indiajuris.com www.indiajuris.com INDIA JURIS