Material Adverse Change Clause is a contractual provision that states the transaction will not take place if some event occurs. These provisions are found in venture financings.
The Minimum Viable Product (MVP) is the most basic commercially viable iteration of a product. Once an MVP is launched, a company can find issues with the product and correct them with a better, bug-free product.
A Most Favored Nations Clause requires that the company gives the investor the best possible investment terms in the future. Note that this right usually expires after the next round. From a company perspective, try to avoid MFN clauses when […]
A Materiality Scrape is a provision generally found in purchase agreements (i.e. stock purchase agreement, asset purchase agreement, merger agreement, etc.) that effectively eliminates any materiality qualifiers in representations and warranties for determining whether a breach has occurred in regard […]
Materiality Qualifier is modifying a part of a contract to require a higher threshold. For example, a “material” breach of a contract requires the bad actor to commit a greater wrong than just a breach of any term of the […]
Market Terms are terms in an agreement that are standard or “market.” In regard to venture capital agreements, most startups and investors use SeriesSeed.com and NVCA.org as a baseline for setting terms for those rounds.
Mandatory Redemption is an investor right to require a company to repurchase some or all of his or her shares at a future date for a given price.
Management Rights are often required by an investor as part of the terms of an investment into a startup, usually in order to satisfy certain ERISA requirements. Management rights may be comprised of certain information and inspection rights, board observation […]
The Management Fee is a fee charged by fund managers to investors for the management of the investments. Most VC management fees are two to three percent of the total amount of the fund’s capital commitment.
A Majority Shareholder is a shareholder who owns more shares in the company than any other shareholder.