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Topic 5 | VC 101: Keeping complex things simple Term sheets A term sheet is a non-binding document outlining the key terms and conditions of a potential investment. It sets the groundwork for the final agreement between venture capitalists (VCs) and startups. Typically, it includes the investment amount, company valuation, and the type of shares being issued. The structure of a term sheet covers essential aspects such as capitalization, rights and preferences (like liquidation preferences and anti-dilution protections), board representation, and protective provisions that ensure investor interests are safeguarded. VCs use term sheets to establish the basics of their investment, ensuring all parties are aligned before moving to detailed legal agreements. Understanding a term sheet is crucial for founders as it outlines the financial and control implications of accepting VC funding. Sample term sheet:

When it comes to attracting the right investors, it’s important to ensure you are finding the investors that make the most sense for your business. Here are a couple of tips for identifying investors in your specific niche: ➡️ Before marketing your business to potential investors, determine your ideal investor. Consider: What niches do they invest in? Where do they invest? If you’re planning to pitch to venture capital and private equity firms, learn about their decision-makers. ➡️ Make sure you and your potential investors are on the same page - do thorough research to ensure your goals and perspectives align. For more tips: https://bit.ly/3yUHcMV #InvestorRelations #StartupFunding #FindInvestors #BusinessGrowth #VentureCapital

Valuations are a well-known challenge known to private equity firms, auditors and asset managers. They can be hard to gauge, and transparent, timely information is hard to come by. While not directly causing startup failures, this environment can dampen investor enthusiasm, decreasing trust and leading to smaller funding rounds. At ApeVue, we are committed to providing transparent data to tackle these challenges. Find out more on the strategies and approaches prevalent in the investor community in our blog: https://lnkd.in/d9Dpr2gN #PrivateEquity #Valuations #StartupFunding

🌟 The Importance of Diversification for Angel Investors 🌟 Why should angel investors focus on diversification? 🔹 Reduce Risk: A diversified portfolio spreads risk across multiple startups, sectors, and stages. 🔹 Broader Exposure: Gain access to a wider range of investment opportunities. If you're an aspiring investor, joining a VC fund can help you achieve diversification and maximize your investment potential. Enroll in our Investor Preparedness Program to learn how to diversify your investment opportunities effectively. For more information go to 👉 https://lnkd.in/daB5j3kd #AngelInvestors #Diversification #VentureCapital #InvestmentOpportunities #InvestmentPreparedness #StartupInvesting #BusinessGrowth

🌱🚀 Attention Small VC Firms! 🌟💼 🔑 Why are Growth Equity Firms CRUCIAL for funding pro rata rights? 🤔💡 💸 Capital Boost: Growth equity firms bring the much-needed capital to the table, enabling smaller VC firms to maintain their stakes in thriving startups without stretching thin. 📈🌱 🤝 Strategic Partnerships: They act as powerful allies, offering more than just funds - think strategic guidance, network access, and operational support to drive success. 🌟🔗 🔄 Sustained Growth: By supporting pro rata rights, growth equity helps ensure that small VC firms can continue to contribute to and benefit from the success of their portfolio companies. 📊✨ 🛠️ Risk Management: Diversifying funding sources with growth equity assistance helps mitigate risks, ensuring a more stable investment environment for all. 🏗️🛡️ 👉 Embrace the power of collaboration! Growth equity firms are the unsung heroes supporting the ecosystem, ensuring smaller VCs can stay in the game and win! 🏆🌈 #GrowthEquity #VCPartnerships #VentureCapital #StartupFunding #InnovationTogether Alpha Partners Steve Brotman

🌱🚀 Attention Small VC Firms! 🌟💼 🔑 Why are Growth Equity Firms CRUCIAL for funding pro rata rights? 🤔💡 💸 Capital Boost: Growth equity firms bring the much-needed capital to the table, enabling smaller VC firms to maintain their stakes in thriving startups without stretching thin. 📈🌱 🤝 Strategic Partnerships: They act as powerful allies, offering more than just funds - think strategic guidance, network access, and operational support to drive success. 🌟🔗 🔄 Sustained Growth: By supporting pro rata rights, growth equity helps ensure that small VC firms can continue to contribute to and benefit from the success of their portfolio companies. 📊✨ 🛠️ Risk Management: Diversifying funding sources with growth equity assistance helps mitigate risks, ensuring a more stable investment environment for all. 🏗️🛡️ 👉 Embrace the power of collaboration! Growth equity firms are the unsung heroes supporting the ecosystem, ensuring smaller VCs can stay in the game and win! 🏆🌈 #GrowthEquity #VCPartnerships #VentureCapital #StartupFunding #InnovationTogether Alpha Partners Steve Brotman

As we slide into the summer holidays and founders, board members and investors start to turn their minds to their company funding requirements for 2024, Morrison Foerster have produced a particularly useful report setting out the key investment terms across markets like the US, UK, Singapore, Japan, Mainland China and LatAm (hat tip to MoFo). If you are looking at raising funds outside of New Zealand, it is well worth a read to understand what terms are common or trending in other jurisdictions.   While NZ didn’t make the report (don’t worry Aussie didn’t either) we thought we would give our key takeouts from the report and the NZ outlook for 2024:   * Non-participating preference shares remain the staple choice, and thankfully (apart from some Asian regions) we are not seeing participating preference shares creeping into the mix. * 1x still seems to be the multiple of choice for liquidation preference rights, although it looks like higher multiples are creeping into later rounds, although again we haven’t seen this much in NZ yet. * Investor protective provisions (veto rights) remain hotly debated but we are more similarly aligned to the US, with investors in many other jurisdictions seeking wider range veto rights than we commonly see in NZ. * Approval thresholds for investor protections (veto rights) have universally moved to treating investors as a group, and depending on the stage of the round, possibly running across different series – NZ has also moved in this direction with the latest AANZ update to its template term sheet making it smoother to navigate through series of rounds, follow-on rounds, and cap table movements. * Redemption rights remain mostly off limits in the venture capital world, and this remains the case in NZ despite the changing economic climate. * We still tend to be egalitarian in NZ when we talk about pre-emptive rights on share transfers or new share issues – most jurisdictions have now reserved this to investors and in some instances major shareholders. * Broad-based weighted average anti-dilution rights seem to universally the flavour including in NZ, although NZ seems a little outstep in continuing to negotiate sunsets on these rights (possible a hangover from the dates of full-ratchet anti-dilutes (?)).   That is it from us in 2023, it has been a massive year – we have seen a lot of adjusting happening in the markets, and here is hoping towards a more stable 2024! Until then, wishing you all a relaxing festive season and summer holiday and see you on the flip side in 2024! Bruno Bordignon, Murray Whyte, Tony Davis, Katie Carson, Judith Harper, Caitlin Ashworth, Jared McIntosh, Wade Pearson, Alice Sparks, Keshika Durga

Interesting to see how VCs are now valuing more profitability (and growth) over growth without any sign of profitability. Bessemer Venture Partners has just shared a metric that can substitute the Rule of 40 as a KPI for growth and cashflow generation. What do you think?

New Blog | Explained: The basics you need to know about Venture Capital Trusts For some investors, Venture Capital Trusts (VCTs) could present a way to tax-efficiently invest and support innovative businesses that may have high-growth potential. However, VCTs aren’t the right option for everyone. Read our new blog to learn the basics you need to know if you’re thinking about using VCTs to invest. Find it here: https://lnkd.in/ecazA8Kv Get in touch: 📞: 0116 262 14 14 ✉️: support@tiltonconway.com 💻: www.tiltonconway.com #femaleentrepreneurs #femalebusinessowners #femalefinance #finance #financialadvice #uk #financetips #wealth #wealthmanager #wealthmanagement

As the #startup and VC ecosystems are becoming increasingly global, what should #entrepreneurs and #investors know about how key #venturecapital investment terms vary across hotspots across the globe? Read MoFo’s global VC terms report for key takeaways: https://bit.ly/41auZhe