Deal Terms
Belt and Suspenders
A conservative approach to deal structuring that layers multiple protective provisions to guard against downside risk.
Belt and suspenders refers to a deal structuring approach that employs redundant protective mechanisms — analogous to wearing both a belt and suspenders to keep your pants up. In VC, this might mean combining liquidation preferences, anti-dilution protection, board control, protective provisions, and milestone-based funding in a single deal.
In Practice
The growth equity firm's term sheet was belt and suspenders: 2x participating preferred, full ratchet anti-dilution, board majority, plus quarterly revenue milestones that could trigger a forced sale if missed.
Why It Matters
Overly protective deal structures can signal investor distrust and create misaligned incentives. Founders should be wary of investors who need multiple layers of protection — it often means they're not truly betting on the upside.
VC Beast Take
A belt-and-suspenders approach is sometimes justified in later-stage deals with larger check sizes, but in early-stage investing, it's usually a sign that the investor shouldn't be doing the deal at all. If you need that much protection, the risk/reward math probably doesn't work.
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