Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

Some CVCs will take a board seat, but many do not require anything beyond an observer role on the board. Lawyers at the CVC parent company are often concerned about potential conflicts of interest that might arise along with issues around intellectual property linkage.

Motivations around valuation, structure, and control in subsequent financings or merger and acquisition (M&A) activity is often different between VCs and CVCs. In addition to how a typical VC is motivated, CVCs often, but not always, have other interests in becoming an investor in your company, including insight into your technology, partnering

Your financials will mean different things to different investors. In our case, we focus on two things: (1) the assumptions underlying the revenue forecast (which we don’t need a spreadsheet for—we’d rather just talk about them) and (2) the monthly burn rate or cash consumption of the business.

think about the business.

While we know you can’t predict your revenue with any degree of accuracy (although we are always pleased in that rare case where revenue starts earlier and grows faster than expected), the expense side of your financial plan is very instructive as to how you

investors that demand a PPM.

Normally, PPMs are generated only when investment bankers are involved and are fundraising from large

Some investors will ask for a business plan or a private placement memorandum (PPM). While this is rarely requested in early stage investments, it’s common in later- stage investments.

The range makes it appear like you are hedging your bets or that you haven’t thought hard about how much money you actually need to raise.