I recently ran into this situation around a very standard
redemption provision.
About a year after the initial close, my client went to raise a
medium sized extension round. They found a lead for the
extension and everything went well. After some negotiation,
we got to the last issue in the term sheet: redemption. The
investor insisted that its redemption right be timed four years out
to coincide with the redemption for the initial investment.
The company, of course, insisted that redemption start at five
years. They quickly reached impasse.
The CFO then asked me what to do. He sent along an email
from the investor who explained carefully and reasonably that he
did not want to be behind the initial investors.
