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Venture Capital MCQs

What is meant by the "anti-dilution rights", often found on a term sheet?

Terms that guarantee a specific return on investment

Terms that restrict the target company to no more than three founders owning stock

Terms that protect the venture capitalist from dilution of their investment by the target company by offering subsequent investments at lower valuations to other investors

Terms that prevent original owners from having more stock than the venture capitalist

Answer

Correct Answer: Terms that protect the venture capitalist from dilution of their investment by the target company by offering subsequent investments at lower valuations to other investors

Explanation:

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