Chapter 6. The Commitment Letter

  • Can It All Be Put Into Words?

  • Your Agreements Must Always Be Put In Writing.

Every venture capital company has a different way of making a commitment to you. It may seem hard to believe, but many venture capital companies will not issue a commitment letter. They will tell you about the proposed deal. They may write it down on paper, but they will not sign a letter that is a formal commitment. Once you have reached an oral agreement with them, they will begin to draw up the legal documents and attempt to close on the investment on the basis of the oral understanding you have reached.

Personally, I like a commitment letter. It seems to me there should be an intermediate step between oral understanding and legal documents. ...

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