Investors and founder is legally binding agreement

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Reference no: EM132163273

1. A 1X liquidation preference would give the Venture Capital Fund the right to the recovery of 100% of their investment before any distributions are made to other shareholders of the company.

True

False

2. Venture capitalists rely on preferred stock in a company to skew investment returns in their favor relative to the owners of the common stock, gain a disproportionate level of control of key decisions relative to the common shareholders and ensure that their interests are aligned with the founders.

True

False

3. The term sheet between an investors and founder is a legally binding agreement.

True

False

4. The term sheet between a venture capital company and the founders of a venture give control of the company to the venture capitalists.

True

False

5. One thing that entrepreneurs seek to get from a term sheet is sufficient capital to bring the venture to the next business milestone while giving up as little of the company as possible.

True

False

Reference no: EM132163273

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