The terms of the deal look different in decline. Here’s what to look out for – TechCrunch

The last decade he was quite friendly to the founders of start-up companies at the deal table. Deadlines have become shorter and transactions have become less structured. Capital was plentiful, the exit window wide open and the prospects strong. Who needs protection from dilution when the market is going up and right?

Now, with a more volatile market, investors’ money is not moving so freely and deals will start to look very different.

Against the backdrop of uncertainty, some venture capitalists are likely to seek to introduce language in worksheets that help reduce the risk of their investments if market conditions continue to deteriorate.

For someone like Stefan Osborne, a member of the Mintz law firm with experience in the last two start-up declines, many of these investor protections will be nothing new. However, many current venture capitalists and founders were not in the industry a decade ago and may find themselves in unfamiliar territory.

Here are some things founders need to keep in mind as they seek to grow in a changing market – one in which they may have less leverage.

Preference for liquidation

Although not all potential risk protections will be economic in nature, there will be many. One area that Osborne predicts will start to emerge is the preference for liquidation.

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