VC Term Sheets – Pay to Play Provisions

Introduction

This post originally appeared as part of the “Ask the Attorney” column I am writing for VentureBeat.  Below is a longer, more comprehensive version, which is part of my ongoing series on venture capital term sheets.  Here are the issues I have addressed to date:

• common mistakes dealing with VC’s
• valuation
• liquidation preferences
• stock options
• exploding term sheets and no-shop provisions
• anti-dilution provisions
• dividends
• Board control
• protective provisions
• drag-along provisions

In today’s post, I examine “pay-to-play” provisions, which can be an important protection for the founders.

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Tags: anti-dilution, full ratchet, liquidation preference, pay to play provisions, pay-to-play, protective provisions, pull-through provisions, pull-up provisions
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