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0 pointslibertymcateer9y ago0 comments

No, this is wrong. There are both participation and ROFR. It is clearly labeled as such.

This is a fairly favorable founder term sheet. I negotiate startup investment fairly often - this is a decidedly equitable offer.

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nikcub9y ago· 1 in thread

There's nothing wrong about what I said - that investor can't block a future round.

These terms are pretty common in the valley, to think thy suddenly give investors a right to refuse other investors in future rounds is frankly ridiculous

The terms Jeremy had with Snap were different, and they didn't get in the way of the entrepreneur in any case since he agreed to move out of the way (his reputation is worth more than follow-on rounds one snap)

That's the best protection entrepreneurs have - investors build their business on their rep. No good or reputable investor is going to burn that for a single term

libertymcateerOP9y ago

> There's nothing wrong about what I said

You said that @sama's term sheet didn't have a rofr, just participation rights. That is incorrect. It has both.

> that investor can't block a future round.

This is expressly what a right of first refusal, or ROFR, is. To be precise: they can prevent the next purchaser from coming in, though they can only do so by making the purchase themselves. If they cannot afford to, they cannot block. The round will, itself, proceed, but not necessarily with the outside investors.

> to think thy suddenly give investors a right to refuse other investors in future rounds is frankly ridiculous

They 100%, unequivocally, absolutely do. This is the central, core purpose of a ROFR. It happens quite often.

Btw, I checked out your profile. I very much respect your work.

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