Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

focus on a length of time you want to fund your company to get to the next meaningful milestone.

If the lawyers are unwilling to agree to a modest fee cap, you should question whether they know what they are doing.

While having mentors is never required, we strongly encourage entrepreneurs to find them, work with them, and build long-term relationships with them. The benefits are enormous and often surprising. Most great mentors we know do it because they enjoy it. When this is the motivation, you often see some great relationships develop.

being able to say “I'm at $400,000 on a $500,000 raise and we've got room for one or two more investors” is a powerful statement to a prospective angel investor since most investors love to be part of an oversubscribed round.

In a pay-to-play provision, investors must keep participating proratably in future financings (paying) in order to not have their preferred stock converted to common stock (playing) in the company.

Our best advice to entrepreneurs on maximizing price is to focus on what you can control and get several different VCs interested in your financing.

your lawyer is a reflection on you. Your reputation in the start-up ecosystem is important, and a bad or inexperienced lawyer will tarnish it.

There are specific SEC rules around accredited investors and you should make sure that each of your angel investors qualifies as an accredited investor or has an appropriate exemption.

there really are only two key things that matter in the actual term sheet negotiation—economics and control.