VC's Investment in CoreTek Inc
Added on 2019-09-30
3 Pages702 Words131 Views
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1.A VC is typically a group of managers who come together with an intention to generatemoney. This is their main intention. They manage high-risk investment so as to maximise thereturns. Further, A VC is set for a limited time period ranging at about 10 years. Thus at theend the investments are to be liquidated under any circumstances. The proceeds from suchliquidation are distributed amongst the members of the VC as per the pre-determinedarrangement. Thus VC’s look for small business with great recognition and engaged in a fieldwith great potential. Hence, a business receiving government funding is recognized and asafer bet as a lot of diligence is already done by the government before the funding. Further,the funding is for a greater commercial cause and hence there is an expectation of a hugepotential in the future. Hence the VC’s appreciated government funding of the company inthe given case. In case of the government funding is replaced by the Seed funding. It is verylikely that the founder would have to part away with 50% of their ownership in the initialstage itself. Thus a dilution of 50%. Thus eventually when the company wold be sold theymight be left with 50% less than the current proceeds received by them.2.TERM SHEETCoreTek Inc. (1998)This term sheet is a mere representation of the understanding of the parties in relation toproposed investment in the company. This is not a legally binding agreement and hence willnot constitute a legally bound obligation. Any further legally binding agreement shall bemade only after objective and definitive negotiations and discussions duly executed by theparties involved.ROUND -1Issuer - CoreTek IncSecurities – Class A Preferred SharesAmount of offering : $ 5.5 million based on pre money valuationInvestors- Adams Capital Management
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