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Flexible VC, a New Model for Companies Targeting Profitability

David Teten

When the company hits potholes, Flexible VC investors usually don’t have the nuclear options of firing management and/or doing a recapitalization. That said, Jonathan Bragdon, General Partner, Capacity Capital , points out that Flexible VC terms “twin” well with equity: providing less dilution while still providing investor assistance. .

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Startup Founder Agreements

blog.simeonov.com

If such individuals do not form a business entity to conduct business in the Field of Interest, but instead sell or assign their developments and technology in the Field of Interest to an unrelated party, I shall be entitled to [ this will vary based on the type of founder ] of the net consideration received by reason of such sale or assignment.

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On the Road to Recap:

abovethecrowd.com

This severely heightens the risk of either running out of money or a complete recapitalization that wipes out previous shareholders (founder, employees, and investors alike). It will also minimize future dilution. Any investor asked to follow a dirty offering will look at the complexity of the previous offering and likely opt out.

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How to Be an Angel Investor

www.paulgraham.com

Youllprobably get either preferred stock, which means stock with extrarights like getting your money back first in a sale, or convertibledebt, which means (on paper) youre lending the company money, andthe debt converts to stock at the next sufficiently big fundinground. [ Dilution is normal. How much does an angel invest?

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The Entrepreneur Thesis

Both Sides of the Table

He was grateful since I stuck with my first company, BuildOnline, well beyond when others would have (since I had taken great dilution during the dot com burst.). maybe I own 20% of the company) or $5 million at a $20 million post (I own 25%) shouldn’t I block that sale of a company a cheap price? He decided to let me earn.