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1) Granting the corporate investor the right to license the startup's technology
2) Granting the corporate investor the right to veto a sale.
He described both terms as "egregious" and added that Intel Capital is infamous for trying to include these. No venture capital firm or entrepreneur should accept these sorts of components in a term sheet, he added. In the end, he said, that many corporate venture capitalists have realized that they don't benefit from including those types of terms in their portfolio companies' term sheets.
Sanjay Subhedar at The Deal's Silicon Valley Summit
For more on The Deal's Silicon Valley Summit, see:
Conference web site
Brian Ward
Tags: svsummit06, svsummit, m&a, entrepreneur, storm+ventures,vc, venture+capital
Disagree that a VC being able to block a sale is a "egregious" - as long as we can't block ANY sale. As long as we can make an appropriate multiple given the risk of the venture, I'm happy to give up my block on a sale. The reason is while a first time entrepreneur and the other common holders might be happy to exit for a few million dollars gain, we wouldn't be. A block on any sale below say 3-5x Helps align the interests of venture investors and management/common holders and reminds everyone what we're building towards.