What is an example of a covenant in a VC investment deal?
A) Preferred equity that also serves as debt instrument with an interest rate.
B) Board seat(s) for the investors.
C) Anti-dilution clauses so that the VC can preserve its current percentage ownership position, regardless of future investors.
D) Placing founders' equity back as stock options which vest over time, or do not vest should the founders be asked to leave the company by the Board.
E) All of the above.

Question

Quizplus · Accepted Answer

All the options listed (A through D) are examples of covenants or terms that might be found in a venture capital (VC) investment deal. These terms are negotiated to protect the interests of the investors and to align the interests of the founders and investors for the success of the company.

What Is an Example of a Covenant in a VC