Founders should prioritize clean term sheets over higher valuations
Scott Kupor · How to Raise Money from a Venture Investor · Jun 14, 2019 · at 17:14
Scott Cooper, managing partner at Andreessen Horowitz, explains the trade-off between higher headline valuation and clean term sheet structure when negotiating with VCs.
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“You know, kind of people are trying to balance off valuation with some of these other rights, and that's really a lot of what I try to point out in the book is that it's very hard to look at these in isolation because they all have some kind of economic value, so if you're going to push on valuation, you might expect a venture capitalist to push on some of these structure items, and so, you know, the big advice that we always give entrepreneurs, and I echo this in the book, is the simpler you can keep it, the better, and so if you've got one deal that's got a lot of structure at this price, you know, ask the question, you know, for a lower price, What would a deal that's a clean deal that doesn't have all the structure look like? That's often, quite frankly, the advice that we give to entrepreneurs.”
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