Diligencing the Terms 

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

In diligencing the startup’s term sheet, check the following points:

Is the valuation or cap rate appropriate for the stage of the company? 

If it’s out of line, then other terms such as liquidation preferences may be needed.

What dilution will the investors go through, such as options pools and follow-on funding?

It’s important to understand who pays for the options pool -- the founders, the investors, or both.

What rights do the investors have over employee compensation, follow on funding, exits, and other major decisions?

The investors need a say in how the company is managed with regards to compensation and raising additional capital. 

What rights do the investors have for participating in future rounds of funding?

For the deals with big return potential, the investors need the right to participate in follow-on rounds.

Are there any redemption rights or dividends in the deal by other investors?

It’s important to know what rights other investors may have over the company’s cash.

Check these points and how they will impact the return.


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

Check out our other podcasts here: https://investorconnect.org/ 
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On this episode of Investor Connect, Hall welcomes Donna Harris, Founder and CEO at Builders + Backers. 

Founded in 2020 and headquartered in Arlington, Virginia, Builders + Backers invests in exceptional entrepreneurs who are building global-scale ventures to power an entirely different future - one where technology creates value for many instead of capturing it for a few. Builders + Backers invests in and helps create a future of Buildership™, where technologies disrupt to democratize.

With three ways to invest, their goal is to put the power of technology in the hands of more people, build up communities and create things that lead to the kind of society where prosperity is widely shared. 

Donna is the General Partner at 1776 Ventures, and a Venture Partner at Praxis. She was formerly Managing Director of the Startup America Partnership and she is on the Board of the Global Entrepreneurship Network and the Policy Council of the Economic Innovation Group. Harris holds a bachelor’s degree from Central Michigan University, an MBA from The University Michigan, and an honorary Doctor of Laws degree from American University.

Donna discusses the state of startup investing, her investment thesis, and some of the challenges startups and investors face.

You can visit Builders + Backers at www.buildersandbackers.com, on LinkedIn at www.linkedin.com/company/builders-backers, and on Twitter at www.twitter.com/buildersbackers. 

Donna can be contacted at donna@buildersandbackers.com, on LinkedIn at www.linkedin.com/in/dharrisindc, and on Twitter at www.twitter.com/dharrisindc. 

_____________________________________________________________________

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.