Venture Capital: Explained through … Food


Venture Capitalists often make fine dinner guests.

I’m convinced that people would understand term sheets and investment agreements if we just included food anecdotes for every line item:

Equity“Here’s five bucks. I get half of that steak. …What?”
Convertible Note “Here’s some cash. I don’t know what you’re ordering, but if it’s good I’ll want a bite.”
Conversion Price – “You bought a steak? Shit. Okay, I think what I lent you should be about a quarter of that steak.”
Conversion Discount“I expected a better steak than this! Screw you, I deserve a bigger cut.”
Automatic Note Conversion“The moment our waiter brings the food I’m eating, I don’t care.”
Optional Note Conversion“It’s taking this long for our food? Gimme my money back, I’m going to McDonalds.”
Target Closing Date“I want to be done by 9pm. Ugh … that ain’t happening, is it?”
Employee Stock Option Pool“Put some of your food on that plate over there to entice people to join our table. …Hey, I didn’t mean to use my food!”
Dividends“Every so often I’m going to want to nibble on your food.”
Liquidation Preferences“I get to take a bite of your food before you do.”
Liquidation Overhang“We all get to take a bite of your food before you do.”
Participation“Are you eating those fries? Can I have one? …Can I have another?”
Board Seat“You can decide where we go for dinner. Except there. …And there. And I can’t eat there. Food doesn’t look good there. Oh! How about we eat there?”