Venture Deals

Venture Deals is an encyclopedic whirlwind of knowledge about venture financing, and as of mid-2020 when I’ve been talking to quite a few VCs, I thought to bring myself up to speed on the process. The book covers the most important business and legal concepts, and it made dry legalese a lot more digestible. The book examines the root of the venture capital industry, and goes into all the gory detail of the business concepts and terminology which go into a venture deal. Most of the concepts are aimed at the first-time entrepreneur who don’t have a background in law, but the book also has plenty of content for late-stage startups and companies trying to get acquired or IPO.

The legal concepts of a deal are often very simple in theory, and only complex when combined together and math is thrown into the mix. Negotiations mainly revolve around economic terms and control terms. Economic terms determine the stake values of the company owners, and control terms determine how much influence each party has in decision making. Negotiations will go fine as long as both parties are fair and prepared. The authors stressed that the single most important thing that an entrepreneur could do to get a good deal is to have multiple VCs waiting in line. What stuck with me after reading was that the legalese is really the evil troublemaker in deals since the tiniest change in language in a long, boring document can mean the make or break of careers and fortunes.