Most of the startups raise capital from a VC or a corporate venture capitalist (CVC). CVCs particularly have a poor reputation among the startup community because of the terms and conditions like “Rights-of-first” (ROF). These terms limit startup founder’s exit valuation.
Microsoft yesterday announced that its VC arm M12 will not demand ROF from the startups it will be investing in the future. Microsoft also mentioned that it won’t ask for any special rights regardless of what other strategic investors held in the startup.
Nagraj Kashyap, Corporate Vice President, Global Head of M12 said that M12 will follow the below rules:
- M12 will not require any ROF term as part of its investment. Ever. It’s not only the right thing to do, it’s good for business.
- As part of our due diligence, M12 will evaluate the business upside not only for our fund, but also whether we can meaningfully help you.
- If M12 chooses to invest, we’re with you for the long term, for your company’s lifecycle. That may mean different things at different times, but we won’t be driven by artificial milestones or deadlines.
- If M12 chooses not to invest, we will explain why. We will also try our best to suggest other ways you can gain funding or other resources to grow your business.
Learn more about this announcement from the source link below.