Removing the Change of Control Provision from our Seed Deals
We founded True Ventures with the premise that we would create a firm that entrepreneurial founders could trust. As such, we consistently review what terms are appropriate for the size and stage of our investments into new companies.
Recently, based on internal feedback from our team and our founders, we have decided to change a key term around change of control in our seed investments. The specific language for this is usually tucked into a longish paragraph about Protective Provisions which states that a change of control cannot occur without the consent of a majority of the Preferred stockholders.
At the earliest of stages when we have made only a small, seed stage investment, we believe that it is appropriate for founders to control the decision about the potential sale of their business. Since launching True in 2005, we have never enforced this term nor have we ever planned to in our seed stage deals.
In keeping with that theme, we have decided to remove the “Change of Control” provision from our seed stage deals moving forward. We believe that entrepreneurs are our customers, and we believe this small word change exhibits the much larger issue of mutual trust that our Founders and True maintain.