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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Should you have targets in investor agreements?
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If you’re an entrepreneur raising funds and the investor is keen to put in specific targets in your shareholder agreement & link it to valuation/ investment tranches, understand the following 3 things before you sign.

1. Get ready to be distracted: This isn’t super founder friendly behavior and builds uncertainty on your dilution/ funds availability. It will be distraction that’ll keep from 100% focus on business even after fund closure. Question if the investor is right for you.

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Why Are Indian Founders Less Informed?
Why Are Indian Founders Less Informed?
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I have had the chance to observe startup founders both in the Bay Area and in India over the past 2.5 years. While it’s a small duration, it does seem to me that founders in India are relatively less aware about how startup investing actually works. By this I mean an understanding of the VC math, acceptable investment terms, exit paths, cap tables and other nuts and bolts that have nothing to do with technology stacks, target markets or business models.

If you were to ask an average Joe (or Jai!) founder in India, who’s yet to close a round, anything regarding investment terms beyond pre-money valuation and dilution, there’s high chance that you’d draw a blank.

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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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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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