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Paul Zimmerman

Showing 1 post by Peter F. Cifichiello.

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Mind If I Take a Seat: Shareholder vs. Board Votes in Venture Capital Transactions

Seats on a board of directors are, no doubt, coveted. In fact, when investing venture capital into a company through an equity financing, VC investors often negotiate to receive one or more board seats for themselves or their designees. Additionally, these investors frequently require that specified matters not be pursued by the company without board approval (including approval by the VC’s board designees). To a large degree, angling for a board presence and mandating board approval makes sense to the extent doing so grants the VC investors a greater level of control and serves to protect their investment. But to what degree should important business decisions be taken, by default, at the board level? And when might it be a better practice to put certain company actions to a shareholder vote? (Read More)