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3.4 Roundup: Changes in the Venture Environment on the Horizon
TheFunded.com News
Posted by Admin: Marc on 2010-01-30
New Deal Structures Emerging: With a new year and an ever changing venture environment, we are seeing new developments in deal terms and exit opportunities. Deal structures known as "DST deals" are becoming more popular with these type of investments associated with Facebook, Zynga, and most recently, Yelp. These deals provide "both a primary investment component as well as a secondary offering for long time employees." - TechCrunch
First Round Capital Develops New Startup Exchange: On the exit side of startups, First Round Capital recently launched a Startup Exchange Fund for its portfolio companies. "The fund allows founders of First Round Capital's portfolio firms to contribute some of their equity into a central pool, and share in any exit success of others who also participate in the fund" according to SoCalTech.com. Similar to the fundamental pinciples of the Founder Institute (run by TheFunded.com), founders own a piece of each other's business to better align incentives, diversify some risk, and share in the upside. SecondMarket and SharesPost are two companies contributing to this changing landscape by creating an alternative exit strategy besides an IPO or M&A. They have created a secondary market for shareholders in private companies, allowing them to sell part of their stake before the realization of a traditional exit. - SoCalTech
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