venture capitalists are capitalizing on power

one of the better companies i am an angel investor with just raised a significant amount of money. that’s a huge deal in this tough climate.

the company got three term sheets which is also really impressive. all about the same valuation and all from great venture firms. but two of the term sheets asked for a 3x liquidation preference.

Yes, I said a three-times participation rights. Whoa!

The company was lucky enough to have another term sheet from a reasonable VC and not have to take on the onerous terms. But it makes me wonder, how many of the companies that have recently raised money (even the well known ones) have crazy terms like these? Will the entrepreneurs of these companies ever be able to make money?

2 thoughts on “venture capitalists are capitalizing on power

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s