Resources for insight and
inspiration
Guides
Insights
Management Rights Letter: Granting Institutional Investors Oversight Access
When startups take money from venture capital funds subject to ERISA or similar regulations, those funds need a special document: the Management Rights Letter (MRL). This short but powerful agreement ensures the investor has sufficient rights to “manage” their investment, helping them comply with legal requirements.
Indemnification Agreement: Personal Protection for Startup Directors and Officers
When startup leaders make tough calls - hiring, spending, pivoting - they expose themselves to personal liability. The Indemnification Agreement serves as a legal shield, protecting directors and officers against lawsuits, claims, and costs incurred while serving the company.
ROFR and Co-Sale Agreement: Managing Share Transfers While Preserving Cap Table Control
In venture-backed startups, control of the cap table is critical. The Right of First Refusal and Co-Sale Agreement (ROFR/Co-Sale) helps founders and investors maintain that control by regulating how shares are transferred - particularly when founders, early employees, or other major holders want to sell.
Voting Agreement: Aligning Shareholder Power in Key Company Decisions
While founders often assume they’ll control their company post-funding, the Voting Agreement tells a more nuanced story. This document outlines how shareholders agree to vote their shares on critical company matters, including board elections and future financing approvals.
FAQs
Open allInvestors who feel informed and engaged are more likely to participate in follow-on rounds and make introductions to new investors.
Investor relations cover all investors, while board management focuses on directors who have governance authority. Both require structured communication.
Monthly or quarterly is standard. The key is consistency and clarity.
They don’t change the headline valuation but impact founder dilution and investor returns. This makes it critical to understand the full term sheet, not just the valuation number.
Traction is one of the strongest drivers. Revenue, user growth, and customer engagement make valuations more defensible.
Not always. An inflated valuation can create problems in later rounds if you can’t meet growth expectations, leading to down rounds.
It depends on your stage. Early-stage investors rely more on methods like Berkus and Scorecard, while later-stage investors lean on DCF and comps.
Send a thank-you email, provide requested info, and share milestone updates. Respectful persistence is better than silence.
No. Experienced investors expect risks. Addressing them openly with mitigation strategies shows maturity and builds trust.
Most initial meetings run 30–45 minutes. Your pitch should take 10–15 minutes, leaving the rest for questions.
A pitch deck, a one-pager, and your cap table are usually enough. Financial models and product demos are useful for follow-ups.
By documenting approvals, following bylaws, and keeping communication open with both the board and shareholders. A decision matrix can help prevent disputes.
No. The board of directors has ultimate authority over major corporate decisions. Founders who ignore board approval requirements risk invalidating decisions and breaching fiduciary duties. The best approach is collaboration and transparency with the board.
Protective provisions are special rights negotiated by investors - usually preferred shareholders - that give them veto power over key corporate actions like mergers or issuing new stock.
Investors typically negotiate board seats at the Series A stage or later, once institutional capital is involved.
Not necessarily. Many founders keep advisors in an informal capacity or through an advisory agreement rather than granting them board seats.
Most early-stage boards start with 3 members, expanding to 5 or 7 as the company grows.
If you incorporate as a C-corporation, yes. An LLC may not require one, but corporations legally must have a board.