Startup Funding Espresso -- Corporate VC Requirements of Founders

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Startups looking to take corporate VC funding should be aware of the requirements put on founders.

Here’s a list to consider:

• Corporate VCs may seek consent rights on contracts the startup enters with competitors.
• They may seek higher levels of compliance on the part of the startup.
• They may require additional rights over an exit, given they are in the deal for a longer time.
• They may limit the information made available to competitors and the market in general.
• They may expect right-of-first-refusal on any shares offered.
• They may put a call option on the company for a future buyout.
• They may put a put option on the company which must buy back the shares in the future.
• They may take a board observer role which absolves them of any fiduciary responsibility.
• They may require the startup to comply with ESG, environmental, social, and governance compliance.

There’s a cost of working in the large company world, so it’s important to understand the requirements that come with the funding.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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