Do you know what you need to know to protect your interest while dealing with seasoned investors?
Have you heard of entrepreneurs who lost their companies to investors/ co-founders?
Raising investment from a Venture Capitalist (VC) or Angel Investor is not an easy task.
Although you may eventually get the money, you may get it on terms you had not expected.
For example, you do not want to lose control over the company or let its management be in a limbo simply because the investor and you cannot agree on a business decision.
Most investors engage top-quality corporate law firms to draft investor-friendly legal documents, which can be modified if an entrepreneur negotiates. An entrepreneur may hire a good business lawyer, or choose to negotiate himself. However, quality business lawyers who are affordable for startups are not easy to find in India. Even if you find one, it is very difficult to assess or manage the lawyer’s performance. Entrepreneurs who are uninitiated may not be able to clearly understand the legal and commercial intricacies of a VC investment. If an entrepreneur can develop his own legal and negotiation strategy, results can drastically improve, irrespective of whether he hires a lawyer or negotiates himself.
Negotiating the first round of funding is critical as it sets the base standard that subsequent investors can follow. If you give away too much, raising a Series B or Series C investment may become increasingly difficult.
In this workshop, we simplify everything for you. You can now learn the basics of investment. We teach you the key terms that VCs use in investment termsheets and how you can negotiate them. You will also learn compliance aspects for receiving investment from both foreign and domestic investors.
Approaching a VC for Funding
• Understanding Non-disclosure agreements (NDAs) and how you should draft them
• Legal aspects to be addressed in a business plan
• How to read, analyze and negotiate a term sheet
• Key commercial terms in a term sheet
• Legally binding provisions in a termsheet
• Exclusivity provisions
• Legal documentation associated with a VC investment
• Termsheet, Investment Agreement, Articles of Association, ESOP, Employment Agreement
• Legal Compliance for VCs
• Taking investment from a foreign investor – additional regulatory compliances
• Typical rights that VCs like to have in a company they fund
• Types of instruments subscribed to
• Reverse Vesting
•Tag, Drags, ROFOs
•Ratchets and anti-dilution rights
•Negotiating the above rights
•Mechanics of investment – What happens after you sign the agreement?
•When investment agreements go to court – Arbitration issues, nominee directors and exit options
•Understanding a shareholders agreement (SHA)
Exercise:Term sheet negotiation exercise for 45 mins – 1 hour
FREE BONUS Startup Investment Kit (worth over Rs. 15,000)
(Consists of 6 agreements)
•Sample Investment Agreement
•Sample employment contract for promoter
•Specimen ESOP Plan
•Investment Compliance Kit
Do you want to learn some law for fun and profit? Do you want to learn how to stay a step ahead so that you can use the rules of the game to your advantage? Would your organization like to equip an audience with practical knowledge of law that can be used in daily life? Would your students benefit from learning practical aspects of business law in their career? Contact us for a workshop here: Request a workshop
Also, don't forget to check our course on Business Law.