Recently, in a conversation the length of the term sheets was treated as an issue (I assure you, it was a riveting conversation). The complaint was that a recent term sheet was too long and that the VC who sent it was not friendly to start. The troubles of successful fundraising!
In fact, a longer-term sheet is much more likely to be founder-friendly and good business practice, and founders should be wary of VCs that have short contracts.
Historically (ie, about 6 years ago) The term sheets used to be solid issues printed directly from Word on plain white paper in Times New Roman script. It was a miserable and horrible world until the cool VCs showed up, adding the design features (fat heads! Logos! Colors!), Claiming they had a "one-page" term sheet for founders, indicating the simplicity of the term sheet the friendliness showed that it was not investors, but rather a Brooklyn barista with an artistic bustle (and lots of cash).
Here's the point that term sheets have an incredibly important purpose that sets out the terms of a deal in plain language. Unfortunately, in modern venture capital there are a lot of conditions to be negotiated in each equity round, from financial terms and options pools to board structures and voting rights in key business decisions such as selling the company, and more , Easier term sheets either discard many of these elements as "standard venture capital conditions" or some other vague language, or even mention them at all.
The challenge is that the term sheet will be signed once, the blueprint for the legal advisors to write down the legal contracts for the VC and the founder, which will allow the VC to buy capital in the startup. If the term sheets are clear, concise and comprehensive, the lawyers will make the agreed terms in legal language in a relatively short time.
When there are key words that are "standard" or lacking in a concept Lawyers do what lawyers need to do: negotiate for their respective party. Suddenly, a term is up for debate, and a founder (and his VC) pay close attention to the legal process (according to experience, this is nobody). Then the legal bills for the round can vary a lot, very fast. This can be a double problem for a startup, as many VCs charge the legal startup cost for the startup they invest in.
I've seen founders in an absolute sticker shock after seeing the legal costs of their company sum in the top tens of thousands of dollars because their lawyers tried to put time to the test, which made it clearer for the parties from the start could be.
So what's more start-up friendly: a longer-term sheet clearly puts the terms of the contract in the foreground and probably saves the founder's legal costs or a shorter (but colorful!) Termsheet that can cost far more in the end?
This is usually a problem for newfounders to their first round of capital. I feel that many VCs take advantage of this naivety to obtain better conditions than they would have otherwise if they had gone through the entire language beforehand. In later rounds, founders either ask all the right questions about the next round of capital, or the other existing investors find this on their behalf.
It is lawful to identify all the essential conditions before your lawyers start writing contracts, whether in fundraising or customer contracts, or what you have. You can not always predict if there is anything else that will lead to disagreements, but if you remove most of the expressions, you save time, and that's ultimately money in your pocket.
Side note: Extra Crunch has released part two out of five of our comprehensive guide to startup legal issues, this time focusing on intellectual property. Do not miss Part 1
Extra Crunch's First Conference Call Held Today
The first Extra Crunch conference call will take place today at 2:00 pm EST. Dial-in details will be emailed to members about an hour in advance. Today, Eric Eldon and I will briefly talk about Extra Crunch, and then TechCrunch social and product manager Josh Constine will talk about the strategic issues facing the social giants. Join in!
More SoftBank Vision Fund Sadness
Written by Arman Tabatabai
Get your popcorn out because it's more drama with the huge Vision Fund from SoftBank and whose LP gives base. The Bahrain sovereign fund stated that it no longer intends to invest in the Vision Fund. Despite previous discussions with SoftBank, the fund plans to invest its money in infrastructure such as energy, healthcare and education.
With approximately $ 15 billion in assets under management, Bahrain's fund is a small potato to SoftBank. His contribution would probably have been much lower than that of his colleagues in Abu Dhabi and Saudi Arabia. According to recent reports that Persian Gulf LPs are frustrated with the Vision Fund and invest more money in infrastructure, Bahrain's decision may indicate a broader sentiment change from the Vision Fund. Just look at the comment that Reuters CEO Reuters gave to Reuters:
"We talked to them and to many people, but it shows us that we have not seen anything that we believe in that we can add value or that it adds value to us. "
Masayoshi Son, CEO of SoftBank, wanted to increase the size of Vision Fund II, but this dream could fade as more large asset managers get involved.
Streaming steam and video games
Extra crunch writer Chris Morris explored the challenges of Steam yesterday. Steam faces two trends. First, publishers are becoming increasingly intelligent when it comes to having their customer relationships, which is difficult to achieve with the design of the Steam platform. The second is that video game streaming is getting closer and closer to reality and this is not good for a game store. In addition, the developers want to keep more of their revenue, and Steam needs a lot.
Interesting here is that publishers (and by that I mean big, AAA publishers) are increasingly thinking that they can make their customers independent Unload the fronts and you do not have to pay the Steam tax to before to push the customer. What worries me is that indie developers do not have the ability to negotiate with Steam, nor do they have the marketing budgets or fan bases to reach a broad audience. This is not a great world and a good opportunity to figure out how to create a more independent playing field for independent game developers.
Chip space is getting hotter as the Korean SK leads over Getty for the Chinese chip maker IvancoVlad Images
Written by Arman Tabatabai 
TechCrunch writer Rita Liao reported that AI chip specialist Horizon Robotics had raised a $ 600 million round of affiliates of the Korean SK Group including the Semiconductor segment.
We have discussed the growing global competition in the chip area before and SK's investment shows that no one wants to sacrifice the next innovative technology like previous established companies that are catching up now.
It is worth noting that Intel's venture arm, Intel Capital, is also an investor in Horizon and initiated its previous fundraiser, as Horizon offers the US another chance to chip giant to lose flooring at the AI chip Technology and gaining stakes in the Chinese market after breaking off a partnership with the state-sponsored Chinese chipmaker Unisoc.
The data point is another positive point for Chinese chipmakers who seem to be doing so still have access to foreign capital and more than enough domestic – often government-backed – investment. The city of Beijing has just increased its $ 1.5 billion venture capital fund to chips, AI and other areas, while China is reportedly on the verge of completing its second state-sponsored sub-fund, which is estimated to be close to $ 50 billion could. 19659014] Related news
Written by Arman Tabatabai
California may have canceled HSR, but China is moving forward with an IPO
while US High-Speed Rail (HSR) projects remain at their level considering its plans The China Railway Corporation is now launching the HSR Beijing line to Shanghai within a year. There is always some financial risk to publicly traded infrastructures, but the line is certainly profitable and the deal should help shore up its owner's finances as the largest rail investments are planned this year.
Japan's antitrust investigation is the latest In the new regulatory wave in Asia
Japan reportedly instituted antitrust proceedings against the country's largest e-commerce platforms. Investigators will examine whether Amazon Japan, Rakuten and the SoftBank subsidiary Yahoo! Japan launched aid programs that are ultimately subsidized by its mid-sized suppliers and limit their revenues.
The investigation is the latest in Japan, which is making wider efforts to strengthen the regulatory control of Big Tech, a worldwide trend that seems to be pervading Asia, as we saw in our previous talks on India. While it is unclear how the increased review will affect companies' perceptions of these markets, it is clear that the Quick Moving and Breaking Game book is becoming increasingly difficult.
- We have a bit of a theme of emerging markets, macroeconomics and the next users who want to join the Internet.
- Further discussion about mega projects, infrastructure and "Why can not we build things?"
To each member of Extra Crunch: Thank you. They allow us to step away from the advertising material business and spend quality time with amazing ideas, people and businesses. If I can ever help, click "Reply" or send an e-mail to email@example.com.
This newsletter was written with support from Arman Tabatabai of New York