Navigating SAFEs, Pay-to-Play Rounds & Risks with Becki DeGraw | Wilson Sonsini Startup Legal Basics
This Week in Startups
Jason Calacanis
4.2 ⢠1.4K Ratings
đď¸ 20 July 2023
âąď¸ 29 minutes
đď¸ Recording | iTunes | RSS
đ§žď¸ Download transcript
Summary
Todays show:
Wilson Sonsini Partner Becki DeGraw joins Jason on the latest edition of Startup Legal Basics! In this episode, they break down legal standards in the startup ecosystem(2:19), SAFE agreements and convertible notes(5:41), conflicts faced by founders and investors(20:58), and much more!
Time Stamps:
(00:00) Wilson Sonsini Partner Becki DeGraw joins Jason
(2:19) Breaking the box or sticking to widely accepted frameworks
(3:47) General trends and the adoption of safe agreements
(5:41) Differences between SAFE agreements and convertible notes
(10:34) Companies that raised high valuations during a hot market and need to raise funds again
(15:43) The impact of down rounds and pay-to-play provisions on investors, founders, and employees
(20:58) Conflicts faced by founders, existing investors, and new investors
(27:58) Surviving down markets
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Transcript
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| 0:00.0 | Hey, everybody. Welcome back to the show. I get legal questions all the time. I get so many legal |
| 0:05.0 | questions. It is crazy. It's like right after product market fit. And so what we like to do here |
| 0:10.2 | on this week in startups is do our startup legal basics series. And I bring my own attorney, |
| 0:15.6 | Becky DeGroff from Wilsonson, C. Neon. She's a partner over there. She works with startups across |
| 0:21.0 | all stages and helps me with all kinds of issues. We've been on tons of adventures. Some of them |
| 0:26.8 | crazy. Some of them delightful. Everything in between. Some of them a little anxiety producing |
| 0:33.1 | even Becky. But we always seem to work it out in the end. Yeah. Yeah. And that's what keeps it |
| 0:38.3 | fun too. Keeps it fun. It's really when we think about startups and law and startups. It's a |
| 0:46.4 | bit of the wild west at times. But we've codified so much of it in standards. And these standards |
| 0:54.1 | are based on trust. What I'm always amazed by I don't know if you have the same amazement |
| 0:58.7 | in America and in the law is that and especially in our industry Silicon Valley is that we've |
| 1:04.4 | created over decades these standards and people even though they could be standards breakers and |
| 1:11.5 | they can do all kinds of stuff and you know jump the fence and go crazy. Everybody 99% of the time |
| 1:19.7 | obeys the standards and just works in good faith to build companies together. It's not |
| 1:24.3 | amazing to you. It isn't. There's a whole ecosystem around it the way from do it from how we do |
| 1:29.6 | the deals to who's involved to the time, the structure, the terms. I mean there's definitely a |
| 1:36.0 | a market around all of that and you can certainly tell when players that aren't used to it |
| 1:41.7 | and kind of come into the ecosystem and you know they get identified pretty quickly as not |
| 1:46.8 | necessarily understanding how it works. Yeah and it's important for founders to understand that |
| 1:54.1 | there are people who've been working for 10, 20, 30, sometimes 40 years in the industry and they |
| 1:59.8 | know the standards. So get a great lawyer, know the standards, come in, try to keep everything |
| 2:04.7 | standard terms as a founder when you're doing these things and deviating from the standards |
... |
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