Assignment - Entrepreneurial Finance: Evaluating VC Term Sheets

Read the case titled: Evaluating Venture Capital Term Sheets. And Answer critically questions

Questions -

1. Prepare the capitalization table for the MVM term sheet (ref. Appendix I).

2. Critically discuss and compare items the entrepreneurs should focus most carefully on in the two term sheets? (ref. Appendix II).

3. How do various terms impact their return if the company does well? For each term sheet, plot the payoff for the VC and the Company and discuss (ref. Appendix III).

4. How are the venture capital term sheets affected by the outstanding convertible notes?

5. What is missing from these term sheets?

6. If they run into trouble, how can they fare in the event of a down round under each of the offers?

7. How, if at all, should they negotiate these terms?

8. With only a few days before the term sheets expire, what should they do? Plot and discuss the Company payoff for each term sheet (ref. Appendix III).

Note - Need assistance only with questions 3 and 8 which require plotting payoff diagrams for the two VC term sheets presented (3) and for the founder (8).

Attachment:- Assignment Files.rar