In this episode, Hall is joined by Jason Todd of Thinker Ventures, business development and consulting firm specializing in startups and small to mid-size growth companies. An entrepreneur with a background in sales/marketing, programming, and eCommerce, Jason uses his expertise to grow and develop small companies and startups.

Jason gravitates to companies that have a good idea where they are at and can articulate where they want to be. Jason advises investors to get a good grasp of the space they're investing in before committing. For entrepreneurs, he emphasizes the importance of objective market validation and a flexible approach to development. Jason talks about the startup scene in the Midwest region and the particular challenges and advantages that come with it. Jason also discusses his investment thesis and highlights some companies he's had success with. Jason stresses the importance of a compelling growth story and responsiveness to feedback. Finally, Jason talks about one of the sectors he finds particularly promising - Artificial Intelligence - and provides some advice for investors looking into that space.

Pay to play is often used in terms sheets. 
 
A pay to play clause is intended to create an incentive for existing preferred share investors to invest on a pro rata basis in future financing rounds. The clause spells out that, if the existing investors choose not to participate in future rounds, they will lose some or all of their preferential rights.
 
For example, if a preferred investor in a down round chooses to invest then he maintains his anti-dilution rights. If he chooses not to invest, then he loses those rights.
 
Other disincentives for not participating include
- Losing some preferred rights.
- Losing all preferred rights and protections, such as forcing the investor into common stock.

If you fail to pay, then you can’t play.
 
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!