Knowledge Repository

Warrants/convertible warrants

Explaination: These are types of instruments an Investor may use to invest in the Startup. A warrant is a document that provides a right to the Inves...
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Valuation

Explaination: Determining the valuation of the Start-up is not an easy task. The biggest determinant of the start-up value is the market forces of th...
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Tag Along Right

Explaiantion: Tag along rights allow minority shareholders to join in a transaction wherein a majority shareholder is selling their stake in the comp...
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Right of First Refusal (ROFR)

Explaination: The Right of First Refusal refers to the right of investors to have the opportunity of matching the price at which a third party has ag...
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Right of First Offer (ROFO)

Explaination: The Right of First Offer refers to the right of investors to have the opportunity to purchase the shares of the selling Founders or oth...
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Reserve matter rights

Explaination: Reserved Matters are the matters that require the prior consent of the Investors before the decision is taken over the same. Term Sheet...
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Pre/post-money valuation

Explaination: Pre-money valuation refers to the value of the Start-up prior to the funding to be raised by the Start-up. Post-money valuation on the ...
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Pre-emptive Right

Explaination: The right of pre-emption for new issues of securities states that when a company issues new Equity Securities after the Closing Date the...
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Next round valuation

Explaination: Next Round Valuation refers to the valuation of the Start-ups on the subsequent round of funding. How it applies to Startup/Investor an...
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Lock-in Period

Explaiantion: Founders shares are normally subjected to a lock-in period. During this time, they are not allowed to sell or transfer their shares to ...
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Liquidity Preference

Explaination: Liquidity Preference term is a necessary term in any term-sheet since it stipulates the payout order at the instance of liquidation of ...
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Investor’s Right to Transfer

Explaination: This terms provides investors with the right to transfer any or all of their shares in the company as per their own discretion except t...
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Information and Inspection Rights

Explaination: Information rights terms are included for the benefit of investors, providing them with information via periodic reports from the promo...
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Fall Away Right

Explaination: Fall Away Right as the name suggests falling away of the rights of the parties in case their shareholding or stake falls below a certai...
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Exit rights

Explaination: The Exit term in the Term Sheet stipulates that the Startup shall provide exit mechanisms to investors as after the period agreed to mu...
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ESOPs

Explaination: ESOP refers to Employee Stock Option Plan. ESOP is given to a specific set of employees of the Startup as an incentive to retain and mo...
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Drag Along

Explaination: A Drag Along with right holder (“DARH”) allows a shareholder to force the other shareholders of the Startup to sell their s...
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Cap Tables

Explaination: Cap Tables are tabular representations of the number of shares owned by the shareholdesr of the Startup and the ESOP pool assigned for ...
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Board Structure

Explaination: The term related to Board Structure in the Term Sheet stipulates about representation of the Investor(s) on the Board of the Company. T...
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Anti-Dilution

Explaination:  Anti-dilution terms are required in order to protect Investors from the dilution of equity when shares are issued at a later date and ...
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