Emerging Enterprise Center Blog - Commentary and Analysis For Entrepreneurs and Startups

Everyone thinks things in the venture world are looking up. Numbers of deals are up, valuations are up, terms are friendly. VCs and entrepreneurs are lining Winter Street and Sand Hill Road holding hands and signing kumbaya. Well, not quite. Foley Hoag LLP, Fenwick &West LLP, and Cooley LLP have now all published their reviews of venture financing transactions for Q1 of 2010, and, while there are some interesting differences, the tone is generally upbeat. Having said that, perspective is everything and sweeping statements about the health of the venture economy are l likely to be wrong if you don’t take all the available facts... More

Bijan Sabet has a post on the subject of east coast versus west coast term sheets. The post raises the issue of whether there are differences and why. The more interesting part is the comments. There is a lot of back and forth on east coast having tougher terms etc. There is a comment to the effect that east coasters are more likely to have redemption rights and founder reps and, perhaps, other terms. There is even comment to the effect that a lot of the differences stem from the lawyering style. But I want to make a few points. First, while we all have some... More

Sometimes I wonder why legal terms exist that have little or no practicable applicability – my clients wonder the same thing. Sometimes, these provisions really are ridiculous, but most of the time they cover off some eventuality that, although remote, actually could happen. The mere presence of the legal provision prevents the bad thing from happening, with the result that after some number of years, everyone starts to comment that whatever it is never happens and the lawyers have gone overboard. One example recently came to my attention: redemption provisions in venture investments. As everyone who plies these waters knows, a typical VC investment provides... More