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Angels, Dragons and Vultures: How to Tame Your Investors And Not Lose Your Company by Simon Acland

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Milestones

From Chapter 2 you may remember the “just-in-time” draw-down structure used by many limited partnership funds to make the Vulture’s all-important internal rate of return look as good as possible.

Now, let’s say you have decided to raise $2 million up front. You did not much like the risk of having to raise money later, and triggering the term sheet’s ferocious anti-dilution provisions. But your prospective Vulture can see that you will not need the second $1 million for a year, or perhaps, if things go well, ever.

So the Vulture suggests that the investment should be staggered. $1 million will be invested on Day 1. $1 million will be available for drawdown, at the company’s option, 12 months later. That way the Vulture can delay drawing ...

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