TL;DR - Comprehensive and helpful review of the structure of funds, deals, and the industry, although a bit dated (1998).
Helpfulness - 5
Tags - fund structure, law, deal structure, useful diagrams
- What void does venture capital fill in capital markets?
- How do VC funds invest?
- How are deals structured?
- How are funds structured?
- What should entrepreneurs consider when interacting with VCs?
- Venture capital firms offer funding for innovation and growth to startups that are too risky to be backed by traditional banks (and lack the material assets for collateral).
- VC funds invest in growing markets — the middle part of the classic industry “S” curve.
- Deals are structured to give VCs downside protection through preferred equity and antidilution clauses, as well as upside benefits such as investing more at a set price.
- Incentives for VC partners are aligned with their investors through profit sharing.
Follow up links:
- S curve explanation, http://analyticsexplained.com/the-s-curve-pattern-of-innovation-a-full-analysis/
- Preferred equity, https://www.upcounsel.com/preferred-equity
- Antidilution provisions, https://www.investopedia.com/terms/a/anti-dilutionprovision.asp