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Demystifying the VC term sheet: Redemption rights
July 5, 2011 /
What are redemption rights? A redemption right is another feature of preferred stock. It lets investors require the company to repurchase their shares after a specified period of time. In essence, it’s a "put" right – that is, the investors may elect to put their shares back to the company. As a practical matter, however, redemption rights are rarely exercised and, according to Fenwick & West’s recent VC survey, only 20 percent of the Bay area deals during the first quarter of included such rights.
Scott Edward Walker
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Posted in: Funding and Building your Business