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by adambenayoun
4444 days ago
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pmarca only highlighted a practice that he thinks is unethical. Lure a startup into accepting a term sheet at a crazy high valuation and get them into a no-shop clause. Once they break off with other investors, renegotiate the terms on the term sheets to a lower valuation. Since you're in a no-shop clause, you have no leverage over the VC and you have 2 options: Accept the lower valuation because there are no competition or reject the term sheet and start over. I bet lot of companies go with option A. In the valley this is unacceptable and I am sure if someone would do that thing, companies wouldn't deal with that VC. a16z sets price on the key deals but they don't renegotiate the terms later on as a tactic. This is the _key_ difference. |
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