Navigating protected provisions

Happy Tuesday Brex community,

Protected provisions are essentially the rights reserved by investors, especially minority stakeholders, to protect their investment and ensure significant decisions align with their interests. These provisions become pivotal during pivotal moments, such as a Series B funding round, where large sums are at stake. For instance, in a hypothetical $30M Series B investment, understanding these provisions is not just about securing funds but also about comprehending the long-term implications on company control and decision-making.

Startups need to be aware of three common types of protected provisions: 1) Anti-dilution Rights, ensuring investors maintain a proportionate share of the company despite future equity issuances; 2) Board Seat Rights, granting investors the right to appoint members to the board of directors; and 3) Liquidation Preferences, dictating the payout order in the event of a sale or liquidation. Each of these can drastically shape the future of a startup. The adage "your price, my terms" often rings true in investment negotiations, emphasizing that while a startup might set the valuation, investors have a significant say in the terms of the deal. In an extreme scenario, these provisions can lead to situations where minority investors wield considerable influence over key decisions, sometimes even resulting in founder displacement. We talk about these nuances, chatham house rules, at our events which you can find below.

Growing together, Michael Morgenstern

Upcoming Events:

• Brex Supper Club in Miami 3/19

  Designed as a highly curated group of high-impact founders post-product market fit and Series B+ investors

  Apply Here Brex Host: Michael Morgenstern

• Brex Supper Club in NYC 3/20

  Designed as a highly curated group of seed stage founders in NYC

  Apply Here Brex Host: Erica Wenger

• Brex Supper Club in NYC 3/26

  Designed as a highly curated group of women founders in NYC

  Apply Here Brex Host: Gaby Levey

• Women Tech Meetup Codi, Techstars & Forbes 30U30 Community in SF 3/28

  Designed as a highly curated group of female founders, operators, and VCs. Expect robust meaningful conversations.

  Apply Here Brex Host: Gaby Levey

Startup of the Week 🤩 

Arina Curtis, Co-Founder and CEO of DataGPT

DataGPT transforms data analysis by delivering expert insights in everyday language. Chat with DataGPT to uncover trends, identify issues, and answer key questions like, “Why did our conversions drop?” It swiftly sifts through billions of data points, surfacing the most critical changes and performing in-depth analysis.

Going far beyond simple queries, DataGPT offers deep insights from segment impact to trend analysis. Reliable, accurate, and thorough, it makes data analysis accessible to all, enabling informed decisions across your team. Focus on driving your business with actionable insights.

Ambassadors Perspective: In a landscape where deep analysis expertise is scarce and the cost of building necessary infrastructure is high, especially for small to medium-sized businesses, DataGPT bridges the gap. It alleviates the common bottlenecks and delays in data analysis and brings meaningful quantitative insights into the hands of non-technical roles. This market is growing rapidly, and Arina is a compelling founder scaling fast across budget rich verticals.

Venture Capitalist Spotlight 🤩 

Iynna Halilou is a Partner at The MBA Fund

The MBA Fund is an early-stage generalist venture capital firm backing companies started by alumni, current students, and dropout founders from Harvard, Stanford, and UPenn. We've made over 140 investments from our core Fund I and Fund II, and our portfolio includes companies like Hightouch (valued at $500M), TRMLabs (valued at $700M), and DataFleets (acq’d by LiveRamp).

Connect with us

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Don’t hesitate to reach out,🦾!

Startups Team @ Brex