jasonkwon

10 ms·

1.
by jasonkwon 8y ago
Network effects don't just exist in tech. Delaware has the most developed corporate law and support services for corporate transactions (you can file charters, mergers, etc. within an hour there; good luck doing that in most other stat
2.
by jasonkwon 8y ago
Yes, this.
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by jasonkwon 8y ago
The term sheet we posted is just meant to show what a pretty good term sheet looks like from a good investor. The investor having its legal fees reimbursed by the company is something that shows up all the time. Sure, you can negotiate th
4.
by jasonkwon 8y ago
Re-vesting schedules are all over the map. Some amount of re-vesting is often required at Series A, but it largely has to do with how vested the founders already are. If for example they've been working on the company for only a year,
5.
by jasonkwon 8y ago
Theoretically this would appear to be true. In practice, the firms that give 1-pagers don't really try to pull a bait and switch like that. They offer the 1-pager so they can close quickly, not so they can get quickly into the no shop
6.
by jasonkwon 8y ago
Major investors concept (investor has to have invested at least $X) is often added in the definitives. Longer term sheets just state a threshold dollar amount; shorter ones (like this one) just skip that definition and just add it in the d
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by jasonkwon 8y ago
It can be legally binding.
8.
by jasonkwon 8y ago
You can make arguments like this in negotiations and sometimes they can work. It just depends. As I mentioned elsewhere, this was meant to be more descriptive than prescriptive. Founder vesting/re-vesting is often a negotiation poin
9.
by jasonkwon 8y ago
Existing employee vesting is generally left alone unless they have something crazy.
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by jasonkwon 8y ago
I think it just comes down to risk preferences. If you optimize for a higher valuation and give the investor downside protection for that, then you own more of the business and therefore more of the upside. If you choose to better optimiz
11.
by jasonkwon 8y ago
probably true
12.
by jasonkwon 8y ago
Annual and quarterly unaudited is normally implied. Sometimes monthly too. Most good Series A investors understand that audited financials don't make sense this early and their lawyers will draft something like the audit requirement
13.
by jasonkwon 8y ago
I'm going to answer this question a little differently, because enforceability can also depend on facts and circumstances. Think of the binding / non-binding distinction as more of a social commitment signal. The No Shop means t
14.
by jasonkwon 8y ago
We send people that link all the time to help them understand option pools. The main point of that post is to make it clear to founders that when an investor is saying they'll invest $X to get 20%, the dilution is more than 20% becaus
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by jasonkwon 8y ago
I wouldn't talk in absolutes because having a ton of negotiating leverage can make everything fair game. But in an run of the mill deal, it's pretty tough to make a VC give up anything that's not in brackets.
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by jasonkwon 8y ago
descriptive, but note the comment about the brackets.
17.
by jasonkwon 8y ago
I think you already answered that question in your post. There would be incrementally more proceeds for the founders and employees in an exit that is flat or below the postmoney valuation of the Series A round. But as you also noted, this
18.
by jasonkwon 8y ago
Yeah excessive preferences do exactly this. But it's not the preference mechanism as much as what the preference does in relation to business value. Assuming liquidation preferences are 1x, what it means is that the company needs to
19.
by jasonkwon 8y ago
Good question. The anti-dilution right is an adjustment to the investor's shares that occurs when the company does a down-round. The "broad-based" qualifier is a reference to the most company-friendly version of this becaus
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by jasonkwon 8y ago
Some minor wordsmithing that reflects lawyer and investor /founder preferences happens a fair amount. The veto on company sales breaks founder friendly occasionally (you need a decent amount of leverage). Some examples: 1. It doesn’t
21.
by jasonkwon 8y ago
It’s meant to provide transparency on what good and clean terms are. It won’t generate negotiating leverage for you if you don’t have any, though on the margins it might help you persuade someone that a term is “market.” Most of the legal
22.
by jasonkwon 8y ago
The impact on safe investors will be less than in those 2 models because those models assume no pool, ie no hires between Safes and Series A. That’s why I said it was artificial, and that safe investors will do better than depicted. In re
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by jasonkwon 8y ago
yes, that's what we meant by the percentages.
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by jasonkwon 8y ago
I answered your first model comparison with point #1. Can't use it here since I don't know what other scenarios you're modeling out. I think points #2 and #3 continue to apply. You can't say that the new framework will
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by jasonkwon 8y ago
Sure - just sent to you.
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by jasonkwon 8y ago
re: short windows for exercising options: https://triplebyte.com/blog/fixing-the-inequity-of-startup-e... https://blog.samaltman.com/employee-equity https://news.ycombinator.com/item?id
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by jasonkwon 8y ago
Both you and your investors will have much better visibility into what % of the company you are selling and they are buying when you are fundraising. It really is as simple as that.
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by jasonkwon 8y ago
Cool. Appreciate the thoughtful feedback.
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by jasonkwon 8y ago
I think Daniel was working off of a different understanding of 'discount.' I think he meant a discount off of the price of the next round (Series A). If the Series A is $30M pre but you set a valuation cap on the safe of $20M po
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by jasonkwon 8y ago
In addition to Michael's point, the other thing that we're seeing is that sometimes people will voluntarily push a priced seed round in order to convert existing premoney cap safes -- because they have no idea what the cap table r

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