Business Law Case
Investor, Waltham Partners or Westlake Partners? Please justify your answers.
In order to make a comprehensive review, we will discuss each investor/partner choice separately on its positive and negative aspects.
Angel Investor
The angel investor is a wealthy individual who is willing to make a personal investment in their venture. An advantage of this investor is that Kartik is familiar with him, as he has done some consulting work for him. The individual investor is willing to put up $1,000,000. A disadvantage of this angel investor is that, as …show more content…
Waltham Partners and Westlake are not preferred as well as they have a lot of demands and thus limit NatuRi’s freedom. The milestones that Waltham Partners and Westlake require are a concern to Kartik and Aravind as it is hard to structure them so that NatuRi would be well positioned to earn the Series A investment. Waltham Partners does improve NatuRi’s credibility however, but this is of lower priority since their research with and approval of the FDA would give them a higher market value over the long term. Another disadvantage of Westlake is that it is less well-known and thus does not offer the credibility advantage at all.
Question 2
Assume that NatuRi Corporation’s management has decided to choose the Waltham Partner’s investment proposal. Further assume that you are the legal counsel of NatuRi Corporation, and that NatuRi Corporation’s management is asking you for advice on the two term sheets received from Waltham Partners. Please indicate in a short memorandum:
(a) What are the provisions of both term sheets that NatuRi should reject and renegotiate; and,
(b) Explain why and how, in your opinion, the rejected provisions should be changed in order to become acceptable for NatuRi.
From the seed note term sheet, NatuRi should renegotiate about two things: the ‘maturity date’ section and the ‘option to invest’ section.
Maturity date
In this section it is stated that at the option of Waltham Partners the note can be converted into