Venture Capital Deal Terms: A guide to negotiating and structuring venture capital transactions

So you’re (about to be) involved in a Venture Capital deal. How do you ensure you end up with the best possible deal?

You need to know what you’re talking about. Not just on a basic level. On every level. You need to understand the ins and outs of the deal. What are your options? How exactly can they impact you, now as well as in the future? What are the people on the “other side of the table” aiming for? What are the pitfalls?

Only if you truly understand the deal, will you be able to come to the best possible deal. And to truly understand the deal, you need to understand the deal from the perspective of both the investor and the entrepreneur.

This new book of VC investor Harm de Vries and VC lawyers Menno van Loon and Sjoerd Mol, provides an in-depth practical look into venture capital deals. Together, the authors have been involved in hundreds of VC deals. Their expertise covers both the investor’s perspective and the entrepreneur’s perspective.

The book shows you how deal terms work out in practice and explains the economics behind the deal terms. And - crucially - it does so both from the point of view of the entrepreneur as well as that of the investor.

The book starts with an introduction of the investment process in general and the different stages of financing. Next, the book introduces a case study of a Series A financing of a startup. A Series A term sheet is used as the basis for the discussion of the different clauses used in venture capital transactions. Each subsequent chapter discusses a certain type of clause in the term sheet (e.g. milestone investments, liquidation preference, anti-dilution protection, and drag along). These chapters also include a standard (and, if applicable, alternative) version(s) of the relevant clause.

The book includes many examples, as well as negotiation tips for both entrepreneurs and investors. The result is an extremely practical guide to venture capital deals, which will be invaluable to anyone involved in venture capital transactions - investors, entrepreneurs and advisors.

For more information on this book and its authors, please see the book’s website: www.venturecapitaldealterms.com. The special VC Term Sheet Template contained in the book can be downloaded (for free) from the aforementioned website.

Harm de Vries is co-founder and general partner of several high-tech venture capital funds. Harm has led many investments through different crucial phases, from due diligence to negotiations of terms to growth- and exit phases. Harm serves as a non-executive board member of several portfolio companies. He started his career in 1994 as a lawyer with an international law firm. Harm holds a masters degree in law from the Erasmus University Rotterdam. More information about Harm can be found on www.innovationindustries.com. Menno van Loon has been working as an interim manager and legal consultant since 2003. Prior to his current professional activities, he worked as an investment banker and lawyer in the U.S. and the Netherlands. Over the past twenty years Menno was involved in venture capital transactions as a lawyer, investment banker and legal consultant, giving him a broad perspective on such transactions. Menno holds a masters degree in law from the University of Groningen. Sjoerd Mol is an attorney-at-law and partner at Benvalor law firm based in Utrecht, The Netherlands. Sjoerd specialises in mergers & acquisitions and venture capital. His clients include investment funds, business angels and start-ups. Sjoerd is co-founder of www.capitalwaters.nl, an internet platform for early-stage deal documentation, and is active as mentor and legal partner of several start-up accelerator programmes. Sjoerd holds both a masters degree in law and a masters degree in economics from the University of Utrecht.