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Investor Connect Podcast


Investor Connect is for investors interested in learning more about investing in startup and growth stage companies. Experienced investors share their experiences and advice with those who are considering an investment into startups and growth companies. It includes a podcast series of interviews with investors to inform others about the process of funding startups as well as a resource list and a discussion board.  

Topics include sourcing, analyzing, and researching companies. Other topics include valuations, terms Sheets, board of directors, board of advisors, due diligence, syndicates, venture capital, angels, angel networks, family offices, crowdfunding, exits, and more.

Investor Connect is a community program. We welcome your suggestions for speakers and topics which you can send to us through the Contact page. No registration is required to use the resources.  Discussion boards are available to post and answer questions about startups and growth company investing through which registration is required.

Investor Connect is a program under the Texas Open Angel Network which is a 501(c3) non-profit dedicated to the education around startup funding.

Disclaimer: Hall T. Martin is the Director of Investor Connect which is dedicated to the education of investors for early stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

Aug 10, 2022

Startup Boards -- 3X in 3 Terms Sheets

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

The biggest challenge in investing in startups is finding the exit.  

Time value of money is important and should be part of your return metrics.

Startup investors look for a 44% IRR.  

IRR is Internal Rate of Return and represents the return on investment with respect to time, unlike ROI, which is return on investment without respect to time.  

Startup investors occupy a unique place in the startup funding ecosystem.  

Startup investor funding is the first money in after family and friends funding.  

The longer you stay in the deal, the greater your risk for dilution by follow-on investors.  

The key to a successful exit is a deal structure that gives some control after making the investment.

Equity-only term sheets give investors little say in the future of the company or how to exit.  

To achieve an exit, you must define it yourself, as the vast majority of startups will not do so. 

You must have it in writing before you invest.

Trying to come to an agreement with the startup after investing is almost impossible as the gap between the startup and the investor is too great to close. 

One way to define the exit is to add redemption rights into the agreement.

An example of this is the 3X in 3 terms sheet.

The deal structure is a Convertible Note with a redemption right for 3X your investment to be returned at year 3 of the investment at ‘Investor Sole Discretion.’   

At the third anniversary of signing the note, the investor has the option to convert the original investment to a three times return ($100K in is $300K out) or to go on the cap table as an equity investor.

In reality, there are many choices. In most cases, the startup is motivated to keep your funds in the deal and will negotiate terms to achieve it.


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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