1.$ TERM document is not equal to transaction document
The $ Term form is only a list of core investment terms, an investment letter of intent, not the final transaction document. The specific investment conditions are all in the transaction documents signed by everyone at last. Therefore, the $ Term table may be only 1 page, but the transaction file may still become smelly and long. For this reason, investors should understand: how much does a 1 page $ Term table cost; How many shares to buy; Other specific conditions shall be subject to the final transaction documents:
2.$ TERM' s balance sheet is not the same as protecting all investors
The essence of investment is business. On the one hand, institutional investors, like entrepreneurs, should go to LP financing before investing in start-ups and be responsible for the LP behind them; On the other hand, investment institutions usually "spend a lot of money and occupy a small share". After the investment, he basically did not participate in the actual operation and management of the company, and even became the owner. Therefore, it is necessary to take necessary measures to protect minority shareholders, especially when it comes to the distribution of the benefit cake that investors deserve, such as issuing additional shares and liquidation.
3. is the appearance of a new model $ Term single an outdated traditional VC?
In Silicon Valley, traditional venture capitalists have also begun to go out. There are more and more diversified channels for good entrepreneurial teams and entrepreneurial projects to get money, such as crowdfunding platforms Angelist, Kickstarters and Y-Combinator. There are also equity crowdfunding platforms such as Angel Exchange, Love Entrepreneurship and Big Home Investment in China. Traditional VC is facing competitive pressure, so it can no longer sit in the office and wait for entrepreneurs to rack their brains to lobby uncle for investment as before. We expect that more and more entrepreneur-friendly funds like Zhenge will join the "One Page $ Term Form" alliance and publicly display their $ TERM forms. We also expect early projects to return to the essence of "angel" and "venture" investment. The transaction documents (not just ts) finally signed by everyone are really friendly to entrepreneurs and do not touch the cake of economic benefits that investors deserve.
The English full name of $ term table is: $ Term equity investment table The list of investment terms is a principled agreement between investment companies and start-ups on future investment. The list of investment terms not only stipulates the investor's valuation of the invested enterprise and the amount to be invested, but also includes the main obligations of the invested enterprise, the main rights required by the investor, and the preconditions for investment transactions. The formal investment agreement signed between the investor and the invested enterprise in the future will include the main terms in the list of contract terms.