Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

focus on a length of time you want to fund your company to get to the next meaningful milestone.

As of this writing in 2011, a very early stage financing can be done for between $5,000 and $15,000 and a typical financing can be completed for between $25,000 and $40,000.

there really are only two key things that matter in the actual term sheet negotiation—economics and control.

an institutionalized super angel, which is starting to be known as a micro VC.

While having mentors is never required, we strongly encourage entrepreneurs to find them, work with them, and build long-term relationships with them. The benefits are enormous and often surprising. Most great mentors we know do it because they enjoy it. When this is the motivation, you often see some great relationships develop.

being able to say “I'm at $400,000 on a $500,000 raise and we've got room for one or two more investors” is a powerful statement to a prospective angel investor since most investors love to be part of an oversubscribed round.

There are specific SEC rules around accredited investors and you should make sure that each of your angel investors qualifies as an accredited investor or has an appropriate exemption.

In a pay-to-play provision, investors must keep participating proratably in future financings (paying) in order to not have their preferred stock converted to common stock (playing) in the company.

your lawyer is a reflection on you. Your reputation in the start-up ecosystem is important, and a bad or inexperienced lawyer will tarnish it.