(1) Expenses. If the deal doesn’t close, the startup pays. That’s silly, especially for an early stage company. (2) Exclusivity. 90 day exclusivity is too long. I agree – if you can’t get the deal done in 45 days from the signing of the term sheet, something is wrong. (3) Founder Buy Back. This one isn’t simple – it’s very context specific, personality dependent, and linked to stage, capital structure, roles and responsibilities of the founders, existing and future management team, and a whole bunch of other stuff.
Brad Feld has been an early stage investor and entrepreneur since 1987. He is currently a Managing Director at Foundry Group. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of TechStars.