Auren - here is VC math - putting in $5m for 5% ownership - VC pays 5% of the legal fees (since the company is paying and they own only 5% of the company) versus 100% as a fiduciary for their LPs a no-brainer. Entrepreneur spends all his/her time negotiating pre-money valuation as they should - 1% increase in premoney worth way more than their pro-rata of the legal fees of $20kt all vcs are fine if you want to negotiate out legal fees in exchange for lower pre-money. Longer term we should have standard SPAs and ROFR and Co-sale forms - much like Y Combinator or NVCA forms that exist and let the VC know that if they are asking for any deviation from those forms to make that clear in the term sheet so as to minimize the legal issues.
LinkedIn: https://www.linkedin.com/feed/update/urn:li:activity:7331404804872712192/
X thread at: https://auren.substack.com/p/founders-stop-reimbursing-your-vcs
Auren - here is VC math - putting in $5m for 5% ownership - VC pays 5% of the legal fees (since the company is paying and they own only 5% of the company) versus 100% as a fiduciary for their LPs a no-brainer. Entrepreneur spends all his/her time negotiating pre-money valuation as they should - 1% increase in premoney worth way more than their pro-rata of the legal fees of $20kt all vcs are fine if you want to negotiate out legal fees in exchange for lower pre-money. Longer term we should have standard SPAs and ROFR and Co-sale forms - much like Y Combinator or NVCA forms that exist and let the VC know that if they are asking for any deviation from those forms to make that clear in the term sheet so as to minimize the legal issues.
This makes sense. Thanks for sharing your thoughts, especially since you're on the other side as a VC.