

Ask HN: VC funding milestones - are they normal? - goodgoblin

Hi - our company is in talks with a VC - we don't have a term sheet or anything, but they've mentioned milestones as part of what we could expect.  I don't have details on it - but was wondering if that was normal or not?<p>thx.
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maxdemarzi
[http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-
in...](http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/)

Basically, it's "normal" but not really great for you.

More about downside protection for the VC, so they can cut their losses.

Also as you reach these milestones, your company should be worth more (since
you created value), but by doing this the VC sets the price for the future
milestone based investment tranches at the lowest price (zero milestones
reached).

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goodgoblin
Thank you!

They have also mentioned 'redemption' and 2x preferred stock - both of which
kind of ring bells.

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cperciva
Some VCs try to negotiate tranches. Based on how rarely this comes up, I
suspect they're a rather small minority.

The right answer is probably "We're negotiating our first round of funding
right now. We'll negotiate our second round of funding later."

