TechCrunch+ roundup: Normalizing down rounds, 2023 climate trends, term sheet basics

The “Pineapple Express” that dropped several inches of rain over the Bay Area last week left the ground saturated. The next storm front expected to arrive tomorrow is expected to bring disruption and destruction on a massive scale.

It’s a decent metaphor for our startup ecosystem: Just as there aren’t enough sandbags in San Francisco to keep everyone’s house dry, rising interest rates, skittish investors and looming economic uncertainty are poised to bring valuations down even further in 2023.

“In a culture where growing valuations are worn like a badge of honor, founders may fear that taking a down round would render them Silicon Valley pariahs,” writes Holden Spaht, managing partner at private equity firm Thoma Bravo.

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In a TC+ column, Spaht encourages entrepreneurs to revisit the operational and fundraising tactics they leaned on in the bygone era of cheap money.

“The funding route you take has enormous consequences for the future of your company, and so it shouldn’t be clouded by ego or driven by media appetites,” he says.

Cutting back is always an option, but not every company is in a position to bootstrap or freeze hiring, which is why Spaht suggests exploring “trade-offs” like convertible notes.

Everyone gets wet when it rains, but accepting a down round allows founders to keep building, “and you have the benefit of resetting expectations of value in a challenging market,” writes Spaht.

Happy new year!

Walter Thompson
Editorial Manager, TechCrunch+

How to make the most of your startup’s big fundraising moment

No matter the size, investments are a sign of validation for any startup.

However, “when you see other companies raising hundreds of millions of dollars, it can be easy to think no one will be interested in hearing about your startup’s much smaller round,” writes Hum Capital CMO Scott Brown.

In his marketing playbook for early-stage startups, Brown explains how founders can use fundraising announcements to maximize media interest, comply with SEC guidelines and align more closely with investors to “get the most bang for their buck.”

How to protect your IP during fundraising so you don’t get ripped off

Egg Packed in Multi Layered Boxes on Wood Floor.

Image Credits: MirageC (opens in a new window) / Getty Images

Most investors won’t sign a non-disclosure agreement before reviewing your pitch because your idea is probably not worth stealing.

That’s not an insult, just a statement of fact.

The odds are low that you’re the first person to come up with an idea, and an NDA could create legal hassles for VCs who interact with hundreds of entrepreneurs each year, many of whom are trying to solve the same set of problems.

“Not all concepts developed by startups are legally protectable,” writes Alison Miller, trial lawyer at Holwell Shuster & Goldberg LLP. “The next best thing founders can do is to signal as much as possible that pitch materials shared with funders are confidential.”

Six climate tech trends to watch for in 2023

wind turbine over landscape

Image Credits: Getty Images

Tim De Chant looked back on his reporting from last year to sketch out his predictions for where he believes climate tech is heading:

  • Software to deploy and manage renewable power
  • Direct air capture
  • Green hydrogen
  • Home renovation contractor software
  • Critical minerals mining
  • Fusion power

“Will 2023 be the inflection point that marks the start of exponential growth? I suspect we’ll know more around this time next year.”

Redefining ‘founder-friendly’ capital in the post-FTX era

Chocolate money coins stacked on white

Image Credits: stockcam (opens in a new window) / Getty Images

Could the FTX debacle have been avoided if investors had taken a more active interest in the company’s operations?

Given the chilly climate for late-stage fundraising and widespread economic uncertainty, “it’s time for the startup community to redefine what “founder-friendly” capital means and balance both the source and cost of that capital,” writes Blair Silverberg, co-founder and CEO of Hum Capital.

In a TC+ guest post, he weighs the relative benefits of active versus passive investors, breaks down the basics of debt financing, and shares advice “for founders seeking a better balance of capital and external expertise for their businesses.”

High-growth startups should start de-risking their path to IPO now

Image Credits: Richard Drury (opens in a new window) / Getty Images

It sounds counterintuitive, but in this chilly fundraising environment, late-stage startups need to plan to go public when the market opens up.

“While some companies delay their IPOs, others can play catch-up and prepare for the time when the open market itches to invest again,” writes Carl Niedbala, COO and co-founder of commercial insurance broker Founder Shield.

In a detailed TC+ article, he looks at why “sensible companies are de-risking their public path,” which sectors are best positioned, and perhaps most notably, which benchmarks startups can use to tell if “an IPO is in their future.”

What to look for in a term sheet as a first-time founder

Businesswoman in a full frame complex maze

Image Credits: syolacan (opens in a new window) / Getty Images

Most financing contacts between early-stage startups and investors take the form of a SAFE note, also known as a simple agreement for future equity.

Legally binding, the document establishes both a company’s valuation and deal terms. “Once you get the term sheet, the game has really begun,” says James Norman, managing partner at Black Operator Ventures.

To help first-time founders better understand “what to ask for” and which red flags to avoid, Connie Loizos interviewed Norman, along with Mandela Schumacher-Hodge Dixon, CEO of AllRaise, and Kevin Liu of Techstars and Uncharted Ventures.

Dear Sophie: Do employees have to stop working until they get their EAD?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

One of our employees is on an H-4 visa and has an Employment Authorization Document. It’s been five months since he filed to renew his EAD, which will expire next month. Is there any way to expedite this process? Does he have to stop working if he doesn’t receive his new EAD card before his old one expires?

Because it’s taking so long to get EAD cards, we’re worried about another of our employees, who has an L-2 visa with an EAD scheduled to expire early next year.

In addition, the H-4 visa employee wants to visit his family in India because it’s been more than three years since he last went. Will he and his family be able to return to the U.S. after four weeks?

— Mindful Manager

TechCrunch+ roundup: Normalizing down rounds, 2023 climate trends, term sheet basics by Walter Thompson originally published on TechCrunch

What to look for in a term sheet as a first-time founder

Securing funding is a stressful endeavor, but it doesn’t have to be. We recently sat down with three VCs to figure out the best way to go about spinning up an investing network from scratch and negotiating the first term sheet.

Earlier this week, we featured the first part of that conversation with James Norman of Black Operator Ventures, Mandela Schumacher-Hodge Dixon of AllRaise, and Kevin Liu of both Techstars and Uncharted Ventures.

In part two, the investors cover more specifics about what to ask for in a term sheet and red flags you should look out for.

(Editor’s note: This interview has been edited lightly for length and clarity.)

Why should you know what’s going to be in a term sheet before you see it?

Mandela Schumacher-Hodge Dixon: Do not wait until you get a term sheet to start going back and forth. The term sheet should be a reflection of what was already verbally agreed upon, including the valuation. Don’t wait until you get that legal agreement in your inbox to begin pushing back, because it’s really annoying, and it starts to affect how they feel about you.

I’ve even seen investors pull the term sheet. No one is bulletproof, but you really want to be as bulletproof as possible in every stage of this. That requires preparation and clear communication.

James Norman: As you plan out your whole fundraising process, lean into it and start to see what the market is thinking, you want to have a bottom line in terms of what you’re willing to accept. At some point, you may need to capitulate, but be convinced about [that bottom line] and have a reasoning for it.

VCs are trying to invest in leaders, so they know there’s going to be a power dynamic here. How you manage that and move things forward [impacts] how they think you’re going to do other things like hire employees and land customers.

Which mechanism is best to use at the outset?

Norman: Once you get the term sheet, the game has really begun.

Regarding terms, you want to make sure that you’re getting an agreement that is at parity with the level you’re at with your company. You don’t want to end up with an angel investor trying to give you some Series A Preferred docs or anything of that nature.

If you have a pre-seed or seed-stage startup, 99% of time, you should be using a SAFE (a Simple Agreement for Future Equity agreement that Y Combinator devised in 2013). It’s got all the standard language that you need; no one can argue with it. [If they do], be like, “Go talk to Y Combinator about that.”

What to look for in a term sheet as a first-time founder by Connie Loizos originally published on TechCrunch

Clearco cuts 25% of staff, considers ‘strategic options’ for international operations

Clearco, a Toronto-based fintech capital provider for online companies, tells TechCrunch that it has laid off 125 people, or 25% of its entire staff. Those impacted will receive severance pay, a two-year window to exercise equity and job transition support from the leadership team, according to Clearco. The company did not say which teams and roles were impacted, or if any C-suite members were let go.

Since launch, the startup, formerly known as Clearbanc, has been built around helping e-commerce businesses land non-dilutive capital, sales and deals. Now, as consumers pull back, e-commerce surge is turning creaky; challenging startups such as Clearco that depend on a constant stream of activity from the cohort.

Michele Romanow, Clearco CEO and co-founder, and Andrew D’Souza, co-founder and executive chairman, sent a memo to staff Friday morning citing the macroeconomic environment as reasoning for the latest workforce reduction.

“We have rising interest rates not seen since the mid-90s, the highest inflation in four decades, one of the biggest swings in European currency since the founding of the Euro, all compounded with a slowdown in e-commerce growth that’s been well documented and continued supply chain issues for companies of all sizes,” the duo wrote in a memo. Alongside the layoffs, Clearco said that it is “considering strategic options” for its international options. After starting in Toronto, Clearco launched in the U.K., Netherlands and other EU markets through 2021. But the expansion hasn’t been all smooth.

Clearco expanded to Germany in June but simultaneously cut 10% of its staff in Ireland, just three months after breaking into the market and announcing plans to hire over 100 employees, reports It’s unclear if there are more geographically focused layoffs to come, or what exactly “strategic” options there are — but we do know that Clearco does have lots of international competitors.

A Clearco spokesperson wrote over e-mail that the company is not taking any interviews today and did not clarify the future of the startup’s international positions. The startup previously conducted another round of layoffs in March 2020, a reduction that impacted 8% of staff then reasoned to the “long-term economic impact of COVID-19.”

D’Souza stepped back from his role as chief executive of the company in February but continues to be the largest shareholder in the business.

D’Souza’s departure from the chief executive role came as the business began hinting at a need to focus on financial results. “For a company of our level of maturity, candidly we built this company in a time where capital was cheap and it was growth at all costs,” D’Souza said in February. “And now we’re moving into a time where you balance capital efficiency and growth — we have to start putting out forecasts and hitting those forecasts.”

He added: “Those things come much more naturally to Michele and less naturally to me, and that was just going to be the job of a CEO as the company got more and more mature.” Romanow has been in the chief executive role for nearly five months.

It’s been around a year since Clearco announced that it secured funding from SoftBank, a $215 million tranche closed just weeks after the company landed a $100 million round that quintupled its valuation to $2 billion.

Romanow and D’Souza’s full memo is below:

Hi All,

This is the note no founders want to write. Today we have made the hard decision to reduce our workforce by 125 people and are considering strategic options for our international operations. No words can soften the blow of being part of a significant layoff and I won’t pretend that hearing “I’m sorry” from us will make it any easier. We’re deeply saddened to lose so many talented, hardworking and entrepreneurial people across every part of our organization and will work tirelessly to open our networks directly to ensure you find a great next home.

Invites will go out shortly to those who are part of this reduction in force followed by meetings with team leads.

How Did This Happen?

The short answer is the current macroeconomic environment looks very different today than in 2021. We have rising interest rates not seen since the mid-90s, the highest inflation in four decades, one of the biggest swings in European currency since the founding of the Euro, all compounded with a slowdown in e-commerce growth that’s been well documented and continued supply chain issues for companies of all sizes.

We were building to match the growth of the economy and now face significant headwinds that simply didn’t exist six months ago. We grew our headcount too quickly in anticipation of continued economic growth and that decision rests on us alone.

After assessing the current market conditions and uncertainty we’re seeing across the e-commerce sector, this was the most prudent action to take and was necessary to:

  1. Ensure we’re able to support as many founders as possible, today and in the future, in their growth journey and;
  2. To come out of this economic downturn a sustainable and profitable company

To Those Leaving Our ClearCrew

We know each of you will process this difficult news in your own way. Whether you’ve been here for months or years, please know that if not for you and your efforts, there is no way we would have been able to build Clearco into the category leader it is today. We are so grateful to have had you as part of this journey.

Our People team will be working with each departing employee to ensure they are supported through this transition, including:

  • providing severance pay;
  • two year window to exercise equity;
  • extended health coverage; and
  • job transition support directly from our leadership team.

We will do everything we can to support you getting to your next chapter.

What Will Happen Next?

Our ethos has always been to support entrepreneurs as they grow and scale, especially the people unable to get funding historically. Even through a recession, we’re committed to helping fund as many founders as possible. We know we have to do everything we can to support the 10,000+ founders who have taken $5B+ from us, the people who need the capital the most.

Resiliency is built into every entrepreneur’s DNA. They inspire who we are as individuals and as a company. We’ve pivoted this business countless times, from funding Uber drivers to Airbnb hosts, and that was all after being told revenue-based financing would never take off. We’ve created a category, and now there’s a company that looks like us in almost every country in the world.

As painful as today is, it should remind us to move forward with more focus, determination and purpose than ever.

– Michele & Andrew

Understanding the not-so-fine print of 2022 term sheets

This is our Wednesday show, where we niche down to a single topic, think about a question and unpack the rest. This week, Natasha asked: What’s in the fine print for term sheets these days, and what does that tell us about who is going to be in control during the downturn? 

The question was inspired by a recent story by Becca Szkutak – one of TC’s newest venture reporters – about how deal terms look different in a downturn. Of course that means we had to bring on Szkutak to talk about her story and dig into a further analysis of how founder friendliness is being challenged right now. Expect a tactical episode all about different terms that may start sneaking into term sheets, the cost benefit analysis of each, and why down rounds aren’t the end of the world.

Equity drops every Monday at 7 a.m. PDT and Wednesday and Friday at 6 a.m. PDT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

Deal terms look different in a downturn. Here’s what to watch out for

The last decade has been pretty friendly to startup founders at the deal table. Term sheets got shorter and deals became less structured. Capital was abundant, the exit window wide open and the outlook strong. Who needs dilution protection when the market is steadily going up and to the right?

Now, with a more volatile market, investor money isn’t flowing as freely, and deals are going to start to look very different.

Amid the uncertainty, some VCs are likely looking to introduce language into term sheets that help derisk their investments if market conditions continue to sour.

For someone like Stephan Osborn, a member at Mintz law firm with experience in the last two startup downturns, many of these investor protections will be nothing new. However, many current venture investors and founders weren’t in this industry a decade ago and may find themselves in unfamiliar territory.

Here are some things founders should keep in mind as they look to raise in a changed market — one in which they may have less leverage.

Liquidation preference

While not all potential risk protections will prove economic in nature, many will be. One area Osborn predicted will start coming up more is liquidation preferences.

How to get what you want in a term sheet

One of the most exciting moments in the life of every newly christened founder is the sweet relief of seeing a term sheet come in from an investor. After weeks, perhaps months (but hopefully not years!), of work fundraising and pitching, there is nothing like getting that email with a PDF attached to it laying out the terms and conditions of the VC relationship going forward.

Of course, that rejoicing dampens quickly as all the specific nuances of the deal suddenly come to the forefront. It’s one thing to get the valuation you want, or the amount of capital you are seeking, but what about the setup of the board of directors? What should you do about deal terms that may shape your startup for a decade or more?

The reality of term sheets, as our guest Lior Zorea discusses, is that the terms you agree to early on at a startup tend to be the terms that will carry through for the life of the company. That means getting that first term sheet right is critical for ensuring the financial and capital success of your business.

Introducing the term-sheet grader

When we launched in 2016, we took the unusual approach of saying we’d buy common stock in startups. We believed then, and still do, that alignment with founders was more important than covering our downside in investments that didn’t work as planned. Said differently, we wanted to enhance our upside through alignment, rather than maximizing our downside through terms.

The world has changed a lot since that time. While we are actively making investments, and still buying common stock, we know that many entrepreneurs may be trying to raise money now — and it is very hard.

Fred Destin wrote a great piece about the ugly terms that can creep into term sheets during difficult times. If you have a choice between a good term sheet and a bad one, of course, you’ll take the good one. But what if you have no choice? And how can you compare term sheets in the first place?

To this end, we developed the term-sheet grader, a simple way to compare different term sheets or help characterize whether a term sheet is good or evil.

Let me first point out that none of this has anything to do with the valuation of the round (share price), the amount of capital, the likelihood of reaching a closing, the quality of the firm or the trust you have with the individual leading the investment, all absolutely critical pieces of the puzzle. Here, we are just looking at the terms and conditions, the legal structure of the investment.

We’ve listed nine key terms below — five that have to do with economics and four that relate to control and decision-making:

  • Each key term can earn +1 for being friendly and -1 for being tough.
  • There are a few really friendly terms that have a score of +2 each.
  • Likewise, there are a few really tough ones that earn a -2.
  • The best a term sheet could score is a +11, the worst is a -11.
  • The “Industry Standard” deal scores a 0.

FWIW, the Pillar common stock standard deal earns a +8 (shown below).

Founder’s guide to the pre-IPO secondary market

The increase in activity in the pre-IPO secondary market means that founders, early employees, and investors are receiving liquidity much sooner in a company’s lifecycle than ever before. For most startups and privately held companies, liquidity is often an issue for stockholders as no market exists for selling shares and/or transfer restrictions prevent their sale. Secondary stock transactions, however, are a way to work around this problem.

Here’s a quick look at how they work and what to keep in mind, especially if you’re going through the process for the first time. (If you’re not familiar, secondaries are transactions in which an existing stockholder sells their stock for cash to third parties or back to the company itself before the company undergoes an exit; traditionally, an exit refers to an M&A or an IPO.)

Offering secondary transactions to founders is a tool VCs have been using to win deals. For example, if a VC promises that the founders will receive $1,000,000 in cash through a secondary sale from a $15,000,000 venture financing round, the founders will likely prefer that VC’s term sheet to a term sheet from a VC that does not offer that deal.

Why would a founder consider a secondary sale of their equity?

First mover advantage: Does it matter in startup fundraising?

We know the world of startup funding is competitive. In fact, I’m speaking at TechCrunch Disrupt on this very topic alongside pre-seed investor Charles Hudson of Precursor Ventures, early-stage investor Annie Kadavy of Redpoint Ventures. I’ve also written extensively for TechCrunch and ExtraCrunch about how founders can optimize their pitch decks to make the most of the 3 minutes and 44 seconds the average VC will spend looking at their deck. We’ve also analyzed the best time of year founders can fundraise to get the most attention from potential investors.

But what can VCs do to make sure they’re getting the biggest piece of the most promising looking companies? We dug into how founders choose their lead investor to gain some insight into how a VC can become more competitive in a rapidly growing market.

Before we dig into the numbers

The data included in this research came from companies that explicitly opted in to participate by responding to an automated email sent to them. We are incredibly appreciative to these founders for making this research possible. You can read more about our startup opt-in process and other aspects of our methodology here.

In this article, I’ll talk about how founders choose their VCs, both in oversubscribed rounds and non-oversubscribed rounds, and how investors can use that information to beat out their competitors.

For VCs, competition is getting harder

Getting a startup funded is a massive hurdle. The good news is there’s actually far more money available now than just a few years ago. In fact, in the first half of 2019 there was $20.6 billion in new capital introduced into the startup market.

Larger funds typically known for investing in later stages have introduced seed funds so they can invest with promising businesses earlier.  Kleiner Perkins announced a $600 million early-stage fund in January, GGV raised a second $460 million “Discovery Fund” last year, even Sequoia Capital operates a scout program with a $180 million fund.

This means smaller funds or those who only invest in earlier rounds might get overlooked when founders are looking for investors.

Investor meetings are a two-way street

In addition to having to compete for the best deals, VCs don’t get it right every time. For every Uber, there are hundreds of Juiceros. The reason they only spend a few minutes looking at a pitch deck is because they’re constantly looking at pitches in hopes they’ll come across another unicorn.

But while it seems like the investors are holding all the cards, if founders optimize their pitch deck and book their meetings in a short window, they can actually create a sense of urgency for the VCs. We’ve seen this recently with the amount of founders reporting oversubscribed rounds.

When looking at how founders chose their lead investors, we discovered that there was a massive difference between those that raised oversubscribed rounds and those that didn’t.

Being the first to move means a lot, until it doesn’t

What was the number one factor in founders deciding on who to choose as their lead investor? We found that nearly 48% of founders chose their lead investor because they were the first one to make the offer.

Anecdotally this makes sense. When DocSend was raising we received a lot of “maybes” during our first few meetings. However, once we had a term sheet most of those “maybes” flipped to a firm “yes.” In fact, many investors that had originally promised a $25k or $50k investment if we found other backers were suddenly asking for $300k or $500k.

We had so many investors interested that our round was oversubscribed and we had to make some choices about who we wanted as an investor. That could have been avoided if any of those VCs had simply acted first.

But when you look at the data a different way, we found that moving first was significantly more important in oversubscribed rounds than those that weren’t. And the more oversubscribed they were, the more valuable moving first becomes.

For founders whose rounds were more than 20 percent oversubscribed, 60 percent of them chose their VC because they came in first with a term sheet. But that dropped to 50 percent for founders that were only slightly oversubscribed and all the way to 38 percent for those founders that weren’t oversubscribed at all.

While we would have thought name-brand VCs might move first, and that top tier interest may cause an oversubscribed round, we found that not to be the case. In both oversubscribed and non-oversubscribed rounds 28 percent of founders reported that a name brand factored into their decision. And for those who chose a name brand investor, only 33 percent of those founders reported that their lead VC moved first. 

The more oversubscribed a round is, the more likely it is that some VCs aren’t going to make the cut. To avoid being the firm that didn’t get the deal it’s best to move quickly when you see a company you like.

A fast round isn’t always an oversubscribed one

Another surprising thing that came up in our research was the amount of time founders spent raising and how that affected their decision making. While we assumed oversubscribed rounds happened significantly faster than the average of 11-15 weeks, we found that oversubscribed rounds only came in slightly under, at 8.6 weeks. However, there was a lot of variability in that number.

We saw some oversubscribed rounds close in as little as 3 weeks and some take as long as 20. So there’s no way to tell whether a round will be oversubscribed based on the time spent fundraising. This means that even if you meet a founder who’s been raising for 10 weeks, it’s still smart to move quickly if you want to be the lead investor.

We would have also thought longer rounds would have benefited the first term sheet more, but there was virtually no difference in the impact of the first acting VC when looking at time. When looking at founders that spent less than 12 weeks raising and those that spent more than 12 weeks, there was virtually no difference in the percent that chose their lead investor based on the first term sheet (at 47 percent and 48 percent respectively).

Terms only matter in oversubscribed rounds

When choosing your lead investor, you would think the terms would be a significant reason to choose one VC over another. But we found that it was barely a factor for most people. In fact, only 4 percent of founders who weren’t oversubscribed cited terms as a major factor.

They instead focused on VCs that had experience in their industry (at 42 percent). But for oversubscribed rounds the percentage of founders who chose their lead investor based on terms shot up to 38. Meaning when the round gets competitive, so do the terms. But they still gave an edge to that first term sheet they received.

Interestingly, a potential deciding factor in oversubscribed rounds could be how well the VC and the founder get along. In those rounds that were significantly oversubscribed, over 46% of respondents said how well they got along with their VC was a factor in choosing them to be the lead. Compare that to only 19% of founders in non-oversubscribed rounds who cited rapport as a key factor in choosing a lead investor.

For many smaller firms getting edged out by bigger players boasting multi-stage funds, it may be as simple as being decisive and personable when it comes to landing the most competitive investments.

How to negotiate term sheets with strategic investors

Three years ago, I met with a founder who had raised a massive seed round at a valuation that was at least five times the market rate. I asked what firm made the investment.

She said it was not a traditional venture firm, but rather a strategic investor that not only had no ties to her space but also had no prior investment experience. The strategic investor, she said, was looking to “get their hands dirty” and “get in on the ground floor.”

Over the next 2 years, I kept a close eye on the founder. Although she had enough capital to pivot her business focus multiple times, she seemed to be at odds, serving the needs of her strategic investor and her customer base.

Ultimately, when the business needed more capital to survive, the strategic investor didn’t agree with the founder’s focus, opted not to prop it up, and the business had to shut down.

Sadly, this is not an uncommon story as examples abound of strategic investors influencing startup direction and management decisions to the point of harm for the startup. Corporate strategics, not to be confused with dedicated funds focused on financial returns like a traditional venture investor like Google Ventures, often care less about return on investment, and more about a startup’s focus, and sector specificity. If corporate imperatives change, the strategic may cease to be the right partner or could push the startup in a challenging direction.

And yet, fortunately, as the disruptive power of technology is being unleashed on nearly every major industry, strategic investors are now getting smarter, both in terms of how they invest and how they partner with entrepreneurs.

From making strong acquisitive plays (i.e. GM’s purchase of Cruise Automation or Toyota’s early-stage investment in Uber) to building dedicated funds, to executing commercial agreements in tandem with capital investment, strategics are getting savvier, and by extension, becoming better partners.  In some instances, they may be the best partner.

Negotiating a term sheet with a strategic investor necessitates a different set of considerations. Namely: the preference for a strategic to facilitate commercial milestones for the startup, a cautious approach to avoid the “over-valuation” trap, an acute focus on information rights, and the limitation of non-compete provisions.