DexAI

During a challenging fundraising environment, the DexAI founders received two term sheets with nearly identical economic terms but very different legal ones. The entrepreneurs had to navigate: representations and warranties (their personal guarantees that the company's intellectual property was free and clear and that its financial statements were accurate), investor control terms (protective provisions, Board of Directors composition, and matters that required investor approval), and how their founders' stock was treated (a buyback right that effectively vested their stock and how that might change upon a company sale/merger/IPO, the termination of a founder, or a founder's resignation for "good reason"). The case also explores a possible intellectual property violation with one founder's prior employer.