Why do investors ask startup founders for stock vesting/ restrictions?
Why do investors ask startup founders for stock vesting/ restrictions?
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A majority of founders today seem to be comfortable with stock vesting provisions in termsheets. However, still encounter a few (usually first-time) founders who see vesting as investor tactic to gain more control. Some feel they’re being forced to ‘earn’ ownership in their own ventures.

This interpretation of vesting is harmful. Investors invest in the mid-long term future potential of a startup, and the team sticking around to achieve its ambitions is key. A non-executive founder (w/o day-to-day role) is as good as dead equity. If a founder leaves, it’s a big blow to the execution ability of a team.

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What’s with this tranched investing?
What’s with this tranched investing?
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I had another call today where co-investors batted for tranched investment to ‘ensure financial discipline’ in startup founders. I am strongly opposed to it. Either you trust in founders and invest, or don’t. Put terms in agreement to ensure financial oversight.

Hate milestones based investing. Things go wrong all the time. Putting founders under added stress of uncertainty on funds is useless.

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Dealing With Draconian Investors
Dealing With Draconian Investors
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In the past year at Globevestor, I have closely witnessed a few instances of startup fundraises where key investors behaved un-admirably, by failing to honor their commitment or trying to re-negotiate previously agreed terms of investment at the last minute.

Mostly this happened at the round closure stage, i.e. post term sheet/ due diligence & during paper-work/ money transfer, despite the investors being well aware of the limited runway & options available to the startup. At worst, they possibly happened specifically because of this knowledge!

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Thumb Rules of Angel Investing
Thumb Rules of Angel Investing
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The past 2-3 years have been a golden period for the Indian startup ecosystem. The exponential growth has slowed a little only in the past few months, as it has globally. Steady growth and positive macro-economic factors since 2008 created a huge opportunity that a few smart entrepreneurs spotted early. Their success has created an environment where entrepreneurs are no more outcasts, but are instead the rockstars.

In parallel, the local angel investing ecosystem has boomed as well. As a result, many investors who aren’t close to the startup ecosystem are beginning to invest in startups. Sometimes, they do it without understanding the associated risks.

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The Pitch Deck
The Pitch Deck
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Writing a pitch deck shouldn’t be very tough, yet many founders struggle with it. The confusion seems primarily on the level of detail required and structure of the deck. I hope this post is of some help.

To be sure, this is intended for early-stage startups targeting investors in India. In my experience, decks in the US are quite brief and are largely a peg for the investor-founder conversation.

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