The Ultimate Guide to VC-Friendly Drag Along and Tag Along Provisions

As a startup founder, you've likely heard of drag along and tag along provisions, but do you really understand their significance in venture capital (VC) deals? In this comprehensive guide, we'll dive into the world of VC-friendly drag along and tag along provisions, exploring their purpose, benefits, and best practices.

Drag along provisions, also known as co-sale provisions, allow a VC to require a founder to sell their shares in a company alongside the VC's sale of their shares. This provision is often included in VC deals to ensure that the VC can exit the company on the same terms as the founder. Tag along provisions, on the other hand, allow a VC to require a founder to purchase additional shares in the company alongside the VC's purchase of additional shares. This provision is often included in VC deals to ensure that the VC can maintain its ownership stake in the company.

In this guide, we'll cover the following topics:

• What are drag along and tag along provisions?
• Why are they important in VC deals?
• How do they work?
• Best practices for negotiating drag along and tag along provisions.
• Common mistakes to avoid when including drag along and tag along provisions in your VC deal.

Whether you're a startup founder looking to secure funding from VCs or a VC looking to invest in a startup, understanding drag along and tag along provisions is crucial. In this guide, we'll provide you with the insights and expertise you need to navigate the world of VC-friendly drag along and tag along provisions.