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Terms in VC Financing Down-Rounds
Venture Capital financing usually works best in the model that all participants anticipate with the first round: The venture will grow successfully which leads to each subsequent financing round being done on a higher valuation than the previous one. Nevertheless, most startups have been experiencing down-rounds in recent years. And the financing becomes just a little more complex with that.
VC Experts features a detailed introduction into the common terms that entrepreneurs should expect with down-rounds: lowered valuation, staggered financing, increased liquidation preferences, participating preferred stock, anti-dilution provisions, redemption rights, dividends, protective provisions, and directors and management. Rather complicated at first sight, but necessary to know and quite logical in the end.