In a downcycle, existing customers will matter even more than they did before. Not only is their retention & expansion important, but they are also your best advocates to new prospects. So, how do you market to, and market with, your existing customers, and who is...
Why Existing Customers Matter I sold enterprise software for 10 years at SAP and Siebel during the license era. If you look at the core economics of that business, the upfront license revenue from a customer is offset by the cost to acquire. Implementation services...
Every SaaS startup board is asking the question – will spending on software go down, stay flat or actually go up as a result of the downcycle. Notice that no one is questioning whether there is a downcycle or not – it is a foregone conclusion. Like all...
“NPV of all start-ups is negative”, says a close friend of mine (Alok) and a very successful VC in the Bay Area. It is true. It is a hard path, with the odds always against you. You have to deal with a hundred battles to get to the finish line – finding product market...
The Company and the Founders shall complete an initial public offering or a ‘strategic sale’ within 5 years from the Closing Date (“Exit Date”) on terms that are acceptable to the Investor. The failure of Company and Founders to provide an exit by the Exit Date shall not relieve the Company / Founders of their obligations to provide an exit to the Investor, which shall continue until the Investor ceases to hold any shares. In case of failure to provide exit, the Investor shall inter-alia have a drag along right on all other shareholders of the Company.
Liquidation Preference
Higher of 1x or pro rata entitlement on an as-if converted basis in any liquidity event. Liquidity event shall be defined in the definitive documents and will inter alia include change in control or sale of substantially all of the assets of the Company.
Pre-Emptive Rights
The Investor shall, in any subsequent offering of securities by the Company, have a right to maintain their shareholding in the Company. [Note to Draft: Any super pro rata rights will be over and above this and should be included here]
Valuation
The valuation section concerns what an investor believes the company is worth. valuation issues addressed in the term sheet will include: pre-money valuation, post-money valuation, capitalization table and price per share.
