Board of Directors

A board of directors, often simply referred to as “the board,” has the highest level of legal authority in the operation of a company. It is responsible for making important corporate decisions, such as budgets, option plans and declaring dividends. The board also decides on the exit paths for a startup as it approves the…

Expenses

Under expenses in the Series Seed term sheet, the startup agrees to reimburse the investors (purchasers) a flat fee of $10K for counsel expenses. The founders are essentially agreeing to reimburse all the investors of the seed round for a one-off legal fee. The fee is set as a fixed charge of $10K. Using the…

Future Rights

Future Rights in the Series Seed term sheet give the investors the same rights if the new investors in a subsequent round of financing get better rights. This means that if the new investors in the subsequent round of financing successfully negotiate for better protection, the Series Seed investors will receive the same level of…

Key Holder Matters

There are three parts under Key Holder Matters in the Series Seed term sheet: (i) a four-year vesting, (ii) a full acceleration upon “Double Trigger” and (iii) all relevant IP assignments before closing. Vesting Investors want to ensure that founders are incentivized to stay at the company and work hard to increase the value of…

10 Rookie Startup Legal Mistakes

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