What Is an Example of a Covenant in a VC

question 21

Multiple Choice

What is an example of a covenant in a VC investment deal?

• A) Preferred equity that also serves as debt instrument with an interest rate.
• B) Board seat(s) for the investors.
• C) Anti-dilution clauses so that the VC can preserve its current percentage ownership position, regardless of future investors.
• D) Placing founders' equity back as stock options which vest over time, or do not vest should the founders be asked to leave the company by the Board.
• E) All of the above.

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Definitions:

Fair Dealing

A legal doctrine aimed at ensuring fairness in commercial transactions and preventing unethical behavior, often involving the honest and straightforward conduct of parties in a transaction.

Partially Melted

A state or condition where an object or substance is in the process of changing from a solid to a liquid but has not completely transformed.

Air Conditioner

A device used to regulate the temperature, humidity, and purity of the air in a room or building.

Consumer Goods

Products and commodities purchased for personal or household use.