Percentage of ownership
Will you get the 50 percent of the money that the company was sold?
Pay attention to new contracts
Conclusion and Suggestion
Contracts between Venture Capital and Entrepreneur is among the key focus of many research academics in Finance. Most of the entrepreneurs ignore the importance of contract because they are so convinced that they will get 50 percent of the money that will be earned by the company. If you as an entrepreneur aware of exactly how much you will get when the company is sold in trade off or IPO then you will have no regrets. Venture Capital investors also tries their level best to avoid these kinds of misunderstanding because they cannot sell the company unless entrepreneur is fully agreed to sell when it is time to sell. For example if your company was sold for $30 million and you only get $2 million, you might not agree and destroy the contract. Transparency is important for Venture Capitalist and Entrepreneurs. Suggestion is to get a lawyer to have a look at it and explain the terms.
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