Investor Connect Podcast

Key to Facilitation Is Operational Involvement

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

In managing an early exit term sheet, it’s important to facilitate the ongoing information rights due to the investors.

Most term sheets provide rights to the company’s financial statements, including the income statement and balance sheet as well as the cap table.

This duty is often left up to the founder to follow up.

In the rush to close sales, hire employees, and make the company successful, the founder sometimes leaves the information rights duty undone.

For an early exit term sheet, it’s important to maintain this duty.

It’s best to set up a service that accesses this information regularly, say monthly to provide the investors the information.

Most investors believe that legal control is the best way to enforce the terms and conditions of the term sheet.

A better way, though is operational control.  

By gaining access to the company’s accounting system and bank account, the investors gain a better understanding of the company.

The more the investors know the company’s situation, the more they can help the company achieve its goals.

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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Direct download: Key_Facilitation_process_is_operational_involvement.mp3
Category:general -- posted at: 6:00am CST