CHAPTER 10 • NETWORKING FOR VENTURE CAPITAL 215
ple, convertible preferred stock provides the investor a claim on the assets
in the event of liquidation and the right to convert to equity in the event of
success. Early-stage investments might also carry rights for the initial
investors to participate in future rounds of financing at a pro rata share.
Often, one venture partnership will provide the entrepreneur access to
additional capital through the syndication of the financing round. Whether
through direct contacts or through reputation, the lead venture capitalists
can attract other investors in subsequent financings as well.
A general partner of the venture capital firm leading an investment
will often take a seat on the board of directors of a portfolio ...