investment(6/0)
Corruption threatens international investment
The story of Bill Browder is not a pleasant one. He moved to Russia in 1996 with $25 million dollars to invest in the Russian oil and gas industry. After revealing corruption in many Russian corporations he was at last kicked out of Russia in November, 2005. His company was seized and used to obtain $230 million in fraudulent tax rebates. One of his Russian employees, Sergei Magnitsky, refused to flee and was detained in prison for over a year.…
Both investors and entrepreneurs need equal motivation
The economic clauses on the term sheet have long-term implications to the motivation both of investors and of owners. What motivates an entrepreneur to seek investment in their business model? The prevailing motivation is pride of ownership. To see one’s idea made a reality and to witness others enjoy the fruit of one’s idea. To have created something new in the world. These are the prevailing motivations. Closely tied to pride of ownership is capital ownership, or the realization of one’s effort in financial gain.…
Investors are partners long after the contract is signed
Treat the term sheet negotiation as only a part of the total deal. Many entrepreneurs may falsely conclude that, since the term sheet sets the rules of the investment contract, it is therefore the only important negotiation. Their efforts are isolated to a search for a VC who will offer a term sheet, then to gain a few term sheets to play off one another, and finally to negotiate every relevant section of the term sheet until they’re happy with the results.…
Partner with a venture capital firm with care
Selecting a healthy VC firm is a critical step in raising venture capital. Venture capital (VC) firms aren’t simple corporations. Within a single firm’s structure there are competing goals and priorities that can tear the firm apart. The fractures that can end a VC firm may not complete the work for years because of the lengthy time each fund’s investment time lasts. Feld and Mendelson estimate it takes ten years for a firm to die (pg.…
Read the term sheet control clause carefully
The control clauses on the term sheet can reorient the power of investors or owners regardless of share percentage. Investors and entrepreneurs share a common financial motivation in their company. The entrepreneur grows the value of her shares when the company performs well, and the investor maintains good prospects for a multiplied return on investment. When both parties think wisely about the long-term effect on the company, they will negotiate economic terms that offer mutual motivation to see the company succeed.…
Generosity builds kingdom equity
💬 Someone in the crowd said to him, 'Teacher, tell my brother to divide the inheritance with me.' But he said to him, 'Man, who made me a judge or arbitrator over you?' And he said to them, 'Take care, and be on your guard against all covetousness, for one's life does not consist in the abundance of his possessions.' And he told them a parable, saying, 'The land of a rich man produced plentifully, and he thought to himself, "…