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A Write-Up of Personal Opinions About Terms in Early Stage (Seed I and II) Financing Scenarios ------------------------------------------------------------------------------------------------------------------------------------------- This is not another wiki entry about standard early stage financing terms. After the last Write-Up about "Early Funding for SaaS Startups in Europe" I have received so many questions about the "right" terms, that I thought it makes sense to start writing up my personal opinion about such contracts. If you seek arguments to "win the battle" and get the maximum out of negotiations with potential investors, this is not the document to read. This document is much more about my opinion in regards to a reasonable, balanced and at the end fair / win-win financing agreement. Its a give and take, and its all about understanding each others motivation, many times driven by the desire for "unlimited risk protection". new topics: Drag-Along Right (Minority's Obligation to Co-Sell); Initial Public Offering (IPO) This current (July 2014 release) contains background information about A ............. Anti Dilution Protection D ............. Drag-Along Right (7.14) E ............. Employee Stock Option Plan (ESOP) F ............. Founder Shares ................ Full Ratchet Anti Dilution Protection see --> Anti Dilution Protection ................ Future Investment Option see --> Investment Option I .............. Investment Option I .............. Initial Public Offering (7.14) L ............. Liquidation Preference M ............ Milestone Based Investment see --> Payment Schedule P ............ Payment Schedule S ............ Stock Option Plan ............... Stock Option Pool see --> Stock Option Plan T ............ Trenched Investment see --> Payment Schedule V ............ Vesting (of Shares) see --> Founder Shares W ........... Weighted Average Anti Dilution Protection see --> Anti Dilution Protection
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