Redemption Strategies

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

In an early-exit term sheet, the investors have the right to redeem their stake in the company before an acquisition.

There are several redemption exercise strategies.

The first strategy is to recover the principal investment.  

This makes the investor whole and now lets them play with "house money".

The second strategy is to place a third of the shares into a cash redemption to recover the initial investment, a third into the company as an equity stake, and a third as a cash redemption to place into the next startup.

This keeps the investors’ fund evergreen, supports the current company, and expands the portfolio.

The third strategy is to take half in debt and leave the other half for equity.

This evenly divides the funds into both sides of the investment options.

These are the most common strategies investors use to redeem their stake in an early exit term sheet.  

It’s important to take into consideration the needs of the startup and how best to support them.


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On this episode of Investor Connect, Hall welcomes Kate Mitselmakher, CEO and General Partner at Bloccelerate VC.

Bloccelerate VC is a platform for blockchain products and services to actualize their true potential, providing them with world-class mentoring, go-to-market solutions, access to peers, developers pool, academic evaluation and research, access to markets, regulatory compliance, and funding necessary for them to succeed. 

Prior to starting Bloccelerate, Kate spent 10 years with global market research leader Gartner, where she supported CIOs of Fortune 500 enterprises, mentored enterprise software startups, and advised venture capital and private equity firms. Kate is a renowned public speaker at global gatherings such as the World Economic Forum in Davos. She has also been featured on Forbes, GeekWire, and other publications as the leading investor in this space. Kate graduated with honors from Harvard University.

Kate shares with Hall what excites her now and advises startups and investors. She discusses some of the challenges they face and the state of startup investing.

You can visit Bloccelerate VC at www.bloccelerate.vc, via LinkedIn at www.linkedin.com/company/bloccelerate, and via Twitter at www.twitter.com/bloccelerate. 

Kate can be contacted via email at kate@bloccelerate.vc, via LinkedIn at www.linkedin.com/in/kate-mitselmakher/, and via Twitter at www.twitter.com/KMitselmakher.  

_________________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org  

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/  

For Feedback please contact info@tencapital.group   

Please follow, share, and leave a review.

Music courtesy of Bensound.