Common Mistakes Entrepreneurs Make in Deal Making

walkercorporatelaw.com

9 pointstommy7l3 comments

I think you forgot one...failure to understand the deal itself. Many times I have seen entrepreneurs not understanding the content of the security they are structuring when raising capital. Lawyers can help, but entrepreneurs need to understand these things for themselves or risk finding out hard realitites later - like being forced to sell and not knowing you had given up the right to block (as an example).

Thanks Brandon - excellent point. Indeed, Chris Dixon addressed this issue in a recent post here: http://www.cdixon.org/?p=702. Moreover, I made a similar comment to your solid interview with Andrew Warner on mixergy.com (http://bit.ly/dVkS1):

"Lesson #3: understand the deal terms and run models as to what happens under various scenarios. Fenwick & West puts out a quarterly survey of market deal terms in venture capital financings (see, e.g., http://www.fenwick.com/publications/6.12.1.asp?...). At a minimum, the entrepreneur should understand what is "market" and how each deal term plays out in a liquidation. For example, in Q1 ’09, participation only occurred in 51% of the Silicon Valley vc deals and 40% of those were capped."

Thanks again.

The lawyer makes some good points and seems to know what he's talking about. Didn't understand about not blinking first - still liked the video

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