Venture Deals: Chapter 4: Economic Terms of the Term Sheet

We are now getting into the juicy stuff – economics of the deal.

When discussing the economics of a VC deal, one often hears the question “What is the valuation?” While the valuation of a company, determined by multiplying the number of shares outstanding by the price per share, is one component of the deal, it’s a mistake to focus only on the valuation when considering the economics of a deal.

In this chapter we discuss all of the terms that make up the economics of the deal, including price, liquidation preference, pay-to-play, vesting, the employee pool, and antidilution.

In addition to defining and describing each terms, we give extensive examples in this chapter. Grab a beer – take your time – there’s a lot here. Almost all of the terms also have a special bonus “The Entrepreneurs Perspective” from our good friend Matt Blumberg, the CEO of Return Path.

  • Susan Perry

    Great book.  Bought last week. Have read it cover to cover. Going to introduce it to our CEO circle this month. This should be required reading in college for everyone who plans to interact with money or study business in any way.  That means everyone.