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A standard investor protection clause commonly found in most VC led term sheets is unfortunately likely to become more relevant than ever as we move into a challenging fundraising landscape. So now seemed a great time to dive in and unpack the ‘anti-dilution’ clause.

The anti-dilution provision is a right that usually applies to preferred shares. It’s something that is negotiated by investors to protect them from the “economic dilution” of the company raising money in the future at a lower price than they invested at (i.e. a “down round”). The impact that this provision will have on the company…

As a pre-seed and seed stage investor, we very rarely have the luxury of investing where there are clear signs of product-market fit and hence getting a sense of if founder-market fit is present is of crucial importance and something we spend a lot of time focused on.

3 ways that founder-market fit can manifest:

  1. Domain expertise
  2. Mission-driven mindset
  3. Technical skills

To really nail it, there’s usually some form of a combination of the above present across a founding team and the importance of each can be quite specific to the startup being built. …

Do they keep all their vested shares?

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The short answer is, it depends...

This is a follow-up post to the one I wrote on vesting, if you haven’t read that then I’d recommend starting here.

Now it’s pretty much universally accepted in early-stage financings that vesting is a crucial term to include and get right. However, following numerous discussions with founders we have backed recently, it seems that there remains confusion around how the mechanics of vesting play out in the event that a founder leaves. …

A simple change that can reduce complexity for early-stage financings

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A challenge that I see founders struggle with when raising money using a convertible (note: I’ll use convertible as a term to capture advanced subscription agreements (ASAs) and/or simple agreements for future equity (SAFEs) throughout this post) is correctly understanding the dilution they are taking. This has traditionally been one of the advantages of doing an equity round (where shares are issued at the time of investment) because it allows everyone to have a clear picture when the round closes of where they stand from an ownership perspective. However, for multiple reasons (time, cost etc.) …

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We recently hosted a get together of some of our founders and one of the topics that came up was investor updates. From my experience startups that set up a process to update investors effectively put themselves in a much better position to succeed.

A good investor update keeps all stakeholders plugged into key developments and therefore allows people who aren’t involved day-to-day to provide the best representation of your startup to others. An example of this is with regards to follow-on investors. Investors in your company are likely meeting with other investors who could be a perfect fit for…

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Pre-emption rights are often talked about as one of the most important terms for early stage investors. But it’s not just important for investors, it’s also a key term for founders to understand when negotiating a financing round.

First things first, what is a pre-emption right?

A pre-emption right gives an existing shareholder the right to participate in a future financing round to the extent necessary to maintain its percentage stake in the company. It provides shareholders the right to acquire shares before they can be offered to a third party (i.e. a new investor) on either an issue of new shares or a share transfer by an…

How do you set them for a funding round?


I’ve previously written about the basics and some of the key considerations when raising using a convertible note (if you haven’t read that I’d suggest starting there). In this post I wanted to dive into probably the most negotiated term, the valuation cap. It’s a topic that’s come up a lot in discussions I’ve had with founders raising using convertibles and I thought it was worth sharing some thoughts more broadly.

Some very hot companies raise money using convertibles without a valuation cap, but in todays market (and any market) that…

Source: Crunchbase

We recently hosted a legal tech roundtable together with our friends at Draper Esprit to discuss some of the big topics related to the sector. It was a lively discussion between founders, investors and industry experts and it got me thinking to the size of the market opportunity in legal tech and why more VC money hasn’t been invested in the space. This was also a topic that came up a lot at the recent excellent Legal Geek conference in London so I thought I’d dive in to take a bit more of a look.

Big numbers are often thrown…

Getting to grips with granting startup options

Photo by Nik MacMillan on Unsplash

An option pool is a key tool at a high growth startups disposal to attract and retain top talent. This post sets out some of the key concepts that founders should consider when thinking about granting options to employees.

What is an option?

Options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. In our case we’re focused on the right to buy a set number of shares at a specified price on or before a defined date. The price is often…

When it comes time to formalise a board (often around the time of a Seed financing round), it can be hard for founders to get the most out of this potentially high value group of people.

A well functioning board can provide founders with an excellent opportunity to remove themselves from day-to-day operational matters and focus on high level strategic issues. Obtaining this “helicopter view” can help ensure the business is on the right track.

To help with this I’ve distilled down some actionable tips for founders to leverage their board and make such meetings as high impact as possible.

10 Tips for Startup Boards:

Tom Wilson

early-stage investor @seedcamp

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