15 terms

ENGR 112 Financing New Ventures + Term Sheets

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Price and Valuation Valuation
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Liquidation Preference
The priority that a preferred share has in the pecking order of receiving proceeds in the event of a liquidation or a deemed liquidation event.
Anti‐Dilution: Full Ratchet vs. Weighted Average
full ratchet: this type of adjustment "ratchets" down the conversion price to the lowest price at which stock is issued after the issuance of the investor's preferred stock - regardless of the number of shares presented.

weighted average: takes into account both the lower price and the actual number of shares issued in the down round.
Board Composition
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Drag‐Along Rights
The rights of a portion of a class of shareholders to force the remainder of that class of shareholders to go along with any decision made by a majority (or sometimes a supermajority) of the class.
Protective Covenants
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Information and Registration Rights
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Participation Rights
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Rights of First Refusal and Co‐Sale
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Drafting Control
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Pre‐Closing Covenants (Diligence Issues)
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Post‐Closing Covenants
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Legal Opinions
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Due Diligence and Legal Expenses
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Tranches based on Milestones
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