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Venture Capital MCQs

What are the "conversion rights", typically stated on a term sheet?

They are terms that allow a venture capitalist to sell off their stock at any point.

They are terms that stipulate that the venture capitalists can convert their preferred shares into common shares which will be more easily liquidated.

They are terms that allow the target company to surrender more equity to the venture capitalist if the venture is growing quickly.

They are terms that prevent anyone from selling stock for the first three years.

Answer

Correct Answer: They are terms that stipulate that the venture capitalists can convert their preferred shares into common shares which will be more easily liquidated.

Explanation:

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