TY  - CHAP
AB  - The purpose of this chapter is to outline the steps involved in obtaining venture capital funding for a start-up business. The chapter first discusses access to Venture Capitalists (VCs) and provides the reasons behind VCs’ preference for investing in a traditional C corporation rather than a limited liability company or other pass-through entity. The chapter then describes both the due diligence performed by VC's counsel and the documentation a start-up must provide to satisfy that diligence need. Next, the chapter addresses typical terms of financing deals with VCs, including the types of securities issued and the rights, preferences, and pricing of those securities. Finally, the chapter concludes with a chart identifying the VC financing terms available before and after a significant market downturn and a sample term sheet summarizing the terms of preferred stock to be issued to a hypothetical VC or VC group investing in a start-up business.
VL  - 18
SN  - 978-1-84950-532-1, 978-0-7623-1481-2/1048-4736
DO  - 10.1016/S1048-4736(07)00010-0
UR  - https://doi.org/10.1016/S1048-4736(07)00010-0
AU  - Carney William J.
ED  - Gary D. Libecap
ED  - Marie C. Thursby
PY  - 2008
Y1  - 2008/01/01
TI  - Chapter 10 Venture capital financing and documentation
T2  - Technological Innovation: Generating Economic Results
T3  - Advances in the Study of Entrepreneurship, Innovation and Economic Growth
PB  - Emerald Group Publishing Limited
SP  - 287
EP  - 311
Y2  - 2024/04/24
ER  -