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Quick Thoughts on Term Sheets and LOIs

Rob Go

When a VC invests in a startup, the two parties usually sign a term sheet that lays out the major terms of the investment round. 90%+ of term sheets result in a closed deal that is more or less equivalent to what was discussed. In the M&A process, an LOI feels an awful lot like a term sheet.

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“I Can Really See Us Leading This Funding Round” Isn’t a Term Sheet

Hunter Walker

This rarely occurs with established investors, because they know breaking their word is a reputation killer around our community. Can someone develop a reputation for being a Mr or Ms Maybe or overpromising and underdelivering? Or it was pulled for no reason. Or the investor didn’t have the money to close the commitment.

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Always Go Home with the Lady Who Brought you to the Dance

Both Sides of the Table

Had he not heard about our commitment it’s not clear whether he would be rushing to submit a term sheet. But for me I care too much about my long-term reputation. I don’t want my reputation to be built on abandoning friends in good times or bad. He has signed a term sheet.

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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

Back in 1999 when I first raised venture capital I had zero knowledge of what a fair term sheet looked like or how to value my company. Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed. No hidden terms.

Valuation 405
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After the VC Term Sheet is Signed – It’s Not Over Yet

Genuine VC

After completing a long process identifying the right venture firms to pitch, running an exhaustive fundraising process, finding a mutual fit, and successfully negotiating terms… at last, the term sheet is signed. The two- to six- week time between the signing of the term sheet and closing is “venture limbo.”

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VC Term Sheets – Investors’ Option to Walk

Scott Edward Walker

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. The Investors’ Right to Walk VC Term Sheets Are Non-Binding. VC Term Sheets Are Conditional.

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Why Entrepreneurs Should Be Generous With Investors

YoungUpstarts

It’s often more all about fearing how tough VCs are going to be with their term sheets and ‘standard’ clauses. Your Reputation is on the Line. Though if you have a reputation giving bad deals, you may not have anyone to negotiate with in the future. As well as how to work with pre and post-money valuations.