Res.Inc. is a pretty short program — 14 weeks goes by fast. What’s impressive, however, is how far folks get in that short time — last fall, a few projects had something close to a term sheet in front of them, typically from an angel investor that’s familiar with the industry.
Blanket advice on negotiating these deals — at least blanket advice worth listening to! — is hard to come by, but knowing the language the conversations take place in is a first step. As a first-time entrepreneur, can you quickly decide how participating preferred vs convertible debt may change the way your company behaves going forward? What’s the difference between Series FF stock and Class F common stock? Given a deal, can you mentally approximate the fully-diluted waterfall diagram for each shareholder, and start thinking about if you’re happy with it?
Yokum Taku is an attorney who represents companies doing venture deals in the Bay Area. His FAQ hasn’t been updated in a bit, but contains a wealth of terms and deal structures that early-stage entrepreneurs should get to know better, to make the best deal for their companies.