Ask a MoFo: NVCA - Protective 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 protective provisions?
Protective provisions are a list of actions or events that a company cannot take or consummate without first obtaining a specified approval by investors (either at the stockholder level or board level). As discussed in additional detail below, these minority protections are generally targeted at some combination of key actions and areas where the interests of investors and founders may not be aligned.
Read the full blog post.