Chapter 10Anatomy of a Venture Capital Transaction

Once you and your potential investors have analyzed all the key relationships and the financial and structural factors and considered them from the risk, reward, and control perspectives, you can create a term sheet. The term sheet sets forth the key financial and legal terms of the transaction, which will then serve as a basis for preparation of the definitive legal documents. The term sheet may also contain certain rights and obligations of both parties, such as an obligation to maintain an agreed-upon valuation, to be responsible for certain costs and expenses in the event that the proposed transaction does not take place, or to secure commitments for financing from additional sources (such ...

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