Funding
NVCA: Pay-to-Play Provisions
This article is one in a series of articles explaining various terms commonly seen in term sheets issued by venture capital funds in connection with equity financings. What are pay-to-play provisions? As the name suggests, “pay-to-play” provisions require existing investors to pay (i.e., invest) in order to continue to play (i.e., maintain investor rights). Specifically, pay-to-play provisions usually require existing holders of preferred stock to purchase, on a pro rata basis, additional shares of the Company in... Read more »