Ask HN: VC funding milestones - are they normal?

https://news.ycombinator.com/item?id=1237001

by goodgoblin • 16 years ago

1 3 16 years ago

news.ycombinator.com

Hi - our company is in talks with a VC - we don't have a term sheet or anything, but they've mentioned milestones as part of what we could expect. I don't have details on it - but was wondering if that was normal or not?

thx.

maxdemarzi• 16 years ago

http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-in...

Basically, it's "normal" but not really great for you.

More about downside protection for the VC, so they can cut their losses.

Also as you reach these milestones, your company should be worth more (since you created value), but by doing this the VC sets the price for the future milestone based investment tranches at the lowest price (zero milestones reached).

goodgoblin• 16 years ago

Thank you!

They have also mentioned 'redemption' and 2x preferred stock - both of which kind of ring bells.

cperciva• 16 years ago

Some VCs try to negotiate tranches. Based on how rarely this comes up, I suspect they're a rather small minority.

The right answer is probably "We're negotiating our first round of funding right now. We'll negotiate our second round of funding later."

Ask HN: VC funding milestones - are they normal?

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