How Investors Structure Investments
Influencing Factors
(Slide 38  of 50)

• Other factors that influence venture capital deal structures include:
  • The inability to freely sell company securities (for securities law and market reasons) makes it more difficult for investors to cash out their investment in the company. This generates agreements, such as registration rights and co-sale agreements, which contractually enhance investor liquidity.
  • Limited liquidity increases the investors’ desire for influence and control which has led to the establishment of various commonly use methods to (i) provide investors with contractual liquidity events and (ii) to enable them to influence and participate in liquidity events such as public offerings.
  • Laws regulating venture capital funds encourage investors to seek Board participation.

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