How to Define Pay to Play

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The idea is you have to pay by participating to play to continue to be a preferred stockholder and keep all of the rights, all the bells and whistles that you have. So who becomes the drivers of this practically speaking does counsel pull aside a founder and say listen here are your options? Or yes yeah so when this happens a founder drives it typically the new investor drives it the board drives it would be against the board's best interest if they don't want to put more money up.

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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