Exit Rights | Know Your Term Sheet

In this episode, Kushal explains exit rights, and why and how VCs exit their position in a company after a stipulated period of time. He also talks about drag along rights, and why they should be avoided if possible.
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Written by: Kushal Bhagia (on screen)
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Editing/Production: Noah Martins
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Graphics: Aman Jain
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Know Your Term Sheet is a series through which we at First Cheque are simplifying the jargons of the startup world for first-time founders, and anyone else interested in learning!

[@firehawk895]

Kushal. I am fundraising a 2.5 mil round as we speak and you have no idea how helpful this is! - It's me Ankan.

[@firstcheque7252]

Awesome! :)

[@User-du7kf]

Seed stage? Which startup?

[@srinathshaw6493]

To the point, short.. worth spending 10 minutes.. Thank you so much... learnt new thing..

[@Arajjin]

Excellent as always

[@azharrabbani6967]

Brilliant explaination. Loved your video Kushal

[@ashishdutta6770]

Excellent! Thank you for this.

[@vatsaljain2035]

Thanks Kushal, this is really helpful. I am raising funds for my company and recently was offered a term sheet in which the investor has specified a minimum IRR % that investors should be offered. Is that the norm in the industry for seed stage investments ? Makes the investment sound more like a debenture and less like an equity investment. What are your thoughts on this ?

[@tanmaymehta3082]

just to be clear , even before an investor has invested in the founder's company , is it the possible that the FOUNDER(who is getting multiple offers from investors) can demand for the "drag along rights" waala deal to be completely removed from their clause / agreement ??