Comments on: Analysts: EDF Ventures’ deal terms aren’t that harsh

By: Michael

Michael — Fri, 22 Aug 2008 18:00:10 +0000

That's true that we don't capture control provisions, however we do capture votes. We only provide terms that we are able to validate from a company's Amended or Restated Certificate of Incorporation rather than leaving it to a pure guessing game on what the terms might have actually been. These filings are available for vieiwing to our subscribers.

By: Anthony Ha

Anthony Ha — Fri, 22 Aug 2008 15:35:10 +0000

Hmm, good point.

By: TheFunded

TheFunded — Fri, 22 Aug 2008 12:52:52 +0000

“Harsh terms” are not fully measured with “the cost of capital benchmark,” though the benchmark seems to cover many of the key investment metrics from reading the Web site.

The one area glaringly missing from the benchmark is control provisions, which normally come in the form of controlling Director seats or the ability to remove a CEO for missing milestones, etc. Most entrepreneurs view losing control of a company as harsh, even if the economics are otherwise fair.

By: Anthony Ha

Anthony Ha — Fri, 22 Aug 2008 06:02:36 +0000

I agree, Don, although I also believe that “very harsh terms” wasn't necessarily what EDF was responding too — certainly it wasn't the only negative comment — that's just what VC Experts chose to examine.

By: Don Jones - VentureDeal

Don Jones - VentureDeal — Fri, 22 Aug 2008 03:28:05 +0000

This information also underscores the difficulty that EDF would have in prosecuting “opinion” which is essentially what TheFunded is showing. “Very harsh terms” is a subjective opinion and I imagine is widely covered under free speech law in the US. EDF might have been better advised to counter the commenter's opinion with those of their own, rather than getting their attorneys involved. The resulting perception in the entrepreneurial community may have been better without the legal pursuit.