Posts Tagged ‘joanne wilson’

Pro-rata Rights For Angels

Joanne Wilson (aka Gotham Gal) has an outstanding post today titled Pro-rata rights. In it she makes two important points about angel investing.

  1. She won’t do a deal if the legal documents aren’t good.
  2. She won’t do a deal if she doesn’t get pro-rata rights.

She then goes on to discuss a thing that happens continually in VC deals. When VCs invest in rounds, they set a threshold for “major investors” and, if you aren’t a major investor, you lose your pro-rata rights. In Joanne’s case, she hates this because her angel strategy is to maintain her pro-rata through the life of the company.

As a VC investor, I always insist on pro-rata rights. I did also when I invested as an angel, although my angel strategy was to invest in only the first two rounds. As an angel, I’d do the seed round, then one more round if needed, and then I’d stop.¬†Occasionally I’d do a later round, especially if my investment was needed for positive signaling, or if it was a down round because of some circumstance, but I still believed in the company.

I know many VC investors who aggressively cut angels out of the pro-rata rights in later rounds. I’ve ended up deals where that’s in the docs, almost always driven by someone else. I’m generally indifferent – I’m delighted to have angels continue to participate if they want, and not if they don’t (my personal syndication agnostic view that I’ve talked about on Feld Thoughts many times.)

As an angel, it’s important to know the lay of the land and how it coud impact you in the future. Joanne does an awesome job of laying to the issue of pro-rata rights in this post – go read it now.

Husband And Wife VC Posts Of The Day

Fred Wilson (USV) and Joanne Wilson (Gotham Gal) have the two best posts up today. Each one involved another person.

Fred’s post -¬†The Management Team – Guest Post By Jerry Colonna – is by – wait for it – Jerry Colonna. If you don’t know Jerry, you are missing out. Jerry was Fred’s partner at Flatiron Partners and an amazing VC in the 1990′s. I had the joy of being on several boards with Jerry and can’t think of anyone I’ve ever worked with who understands people better. Jerry’s post wraps up Fred’s MBA Monday series on the management team and is a dynamite finish to an excellent post.

Not to be outdone, Joanne Wilson has a great post up titled¬†Caren Maio, Nest.io, Woman Entrepreneur. It’s part of Joanne’s Women Entrepreneur Monday’s series and highlights Caren Maio, CEO of Nest.io, and a member of the first TechStars New York program. Caren is spectacular and Joanne does a nice job of explaining Nest.io while shining a bright light on the awesomeness that is Caren.