5. Financing

Q2 (Investment Contracts)

In entering into an investment contract with a venture capitalist, what kind of points should we be careful about?

When you enter into an investment contract with a venture capitalist, regardless of how much you desire to make the investment, you shouldn’t sign the agreement without properly reviewing its contents. If necessary, you should consult with a lawyer, and negotiate points that need to be negotiated, and then sign. Specifically, you should consider such matters as the following: (1) whether the fundamental terms match your understanding; (2) whether you can satisfy the closing conditions; (3) whether the representations and warranties are appropriate; (4) whether you can accept the corporate governance terms (such as board seats and protective provisions); (5) whether you can accept the stock transfer restrictions; and (6) whether the exit rules (such as redemption rights) are not unreasonable.

(Posted: January 27, 2012)