I recently finished Brad Feld’s and Jason Mendelson’s fantastic book on venture capital deals. The book is based on series of blog posts from the blog at Foundry Group. It takes much of what has been written there over the years and pulls it all together in to an easy to comprehend format that will most likely stay within easy reach for some time to come.
The book starts off explaining the basic parts of the VC deal process, but really hits it’s stride when Brad and Jason breaks down the various aspects of each part of the deal in to what the investor expects and what the entrepreneur expects. Having both sides of the deal presented helps put in to perspective what is important to who and why. As with most deals, what is important to you is very likely a non-issue to the other party, but knowing that going in makes it easier to give and take in the negotiation process to get the deal you want.
For me, the best part of the book is the detailed explanation of the Term Sheet. Easily the most confusing part of any financing deal, the Term Sheet can set you up for failure before any money changes hands at all. And without at least a basic understanding of what various aspects of the deal mean, you can find yourself regretting the deal and looking for a way out. Brad and Jason do a wonderful job of making even the most technically challenging areas understandable, even if the answer is ‘get a good lawyer’.
Even if you don’t read the book clear through, it is worth holding on to as a reference guide to look back on should you become lost in your own deal making process. Or even if you simply want to sound more educated on the subject than you really are when you first start meeting with VCs and Angel Investors. I know that I feel a little better prepared for the path ahead having read the book, and if you think that you may find yourself in a venture capital deal in the future, you need to read this book as well.
Learn all about the art of the venture capital deal.
From beginners to experienced entrepreneurs, knowing how a venture capital deal works before you start is best way to be sure that the deal you get is the deal you want.