The standard deal in venture has come into focus over the past 5 years.
It looks like this:
1x liquidation multiple (meaning the investors get their cash back first in an exit)
Non-participating preferred stock (no double dip for the VC)
Non-cumulative dividends
This new standard got tested in 2023 and 2024, when the fundraising market turned sour and many thought investors would use their leverage to extract better terms from founders who lacked options.
And guess what? They didn't.
Deals where the liquidation multiple was above 1x made up 2%-5% of early stage rounds in those rough years. So 96 out of 100 deals were market standard even in a downturn.
Kudos to the investors keeping things clean and long-term aligned.
Now, the only shadow on this happy story is round volume. There have been fewer and fewer rounds raised as we exited the wild 2021 period.
Even so, a consolidation of venture terms for most deals is hugely beneficial to the ecosystem at large. Capital flows through the path of least resistance and non-standard terms = roadblocks to overcome.
Onwards!
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Peter Walker
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