What to Watch For

Not all money is good money.

Red Flags

1. Excessive Liquidation Preference

2x or more means investors get paid twice before you see anything.

2. Participating Preferred

They get preference AND percentage. Double dipping.

3. Full Ratchet Anti-Dilution

Down round destroys founder equity disproportionately.

4. Blocking Rights on Everything

Investor can veto all decisions. You lose control.

5. Unrealistic Milestones

Tied to vesting or next round. Sets you up for failure.

What to Do

• Get a lawyer who understands VC
• Negotiate hard on structure
• Walk away if it's predatory
• Remember: valuation isn't everything

Protect yourself.

• fundraising
• term-sheets
• vc