Ties the employee to the long-term success of the venture

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Reference no: EM132163280

1. An option pool is used by founders to make payments to employees. The options grant the employees the right but not the obligation to buy shares of the companies shares at a set price before they expire. Using options conserves cash and ties the employee to the long-term success of the venture.

True

False

2. The exclusivity clause in a term sheet prohibits the founder from contacting other venture capitalists to get a better or similar offer for a set period of time.

True

False

3. If a 1X liquidation preference is included in the term sheet the Venture Capitalist will never be able to realize a gain on its investment but will be protected from a loss.

True

False

4. The exclusivity clause in a term sheet will constrain the founders from shopping the deal around while a Venture Capital frim is decoding weather to invest or not.

True

False

5. The (fully diluted share count) is the total of all existing shares + things that might eventually convert into shares.

True

False

Reference no: EM132163280

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