A VC may request a ____, a penalty requiring founders to give up some of their stock to the VC if the company does not achieve its projected performance goals.
A)fair market provision
B)stop-loss statement
C)forfeiture provision
D)liquidation agreement
E)letter of intent

Question

A VC may request a ____, a penalty requiring founders to give up some of their stock to the VC if the company does not achieve its projected performance goals. ​
A)fair market provision
B)stop-loss statement
C)forfeiture provision
D)liquidation agreement
E)letter of intent

Quizplus · Accepted Answer

A forfeiture provision is a clause in a venture capital agreement that requires founders to give up a portion of their equity in the company if certain performance targets are not met. This serves as a form of protection for the investors, ensuring that the founders are motivated to meet the agreed-upon goals.

A VC May Request a ____, a Penalty Requiring Founders