Startup Professionals Musings

SEPTEMBER 26, 2015

Perhaps they're way off in their valuation (usually far too high), or paralyzed by fear at seeing the other terms, because they have no idea what's normal, and what's worth a fight to the death (their startup's). Still, no one wants the terms to be so complex that the deal never closes. Here is a summary of the key terms to expect on the term sheet, or the contract between the founder and investor: Consideration given for the money invested.

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Startup Professionals Musings

JANUARY 27, 2012

Remember a term sheet agreement is not a deal until the check clears. However, there is no set pattern of terms an entrepreneur might be able to anticipate from either. Your best strategy is to bring your own term sheet to the negotiation as a starting point. When a company is at its earliest seed stage, the terms tend to be the least complex. entrepreneurs startups angel investors term sheets business

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YFS Magazine

OCTOBER 8, 2016

It can be tempting to skip the term sheet and simply have your lawyer prepare the investment documents. Finance Grow investing investors money raising capital raising money term sheet venture capital

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Andreessen Horowitz

JUNE 22, 2019

a16z Managing Parter Scott Kupor’s new book, Secrets of Sand Hill Road , is a guide to engaging with and understanding VC that covers everything from terminology and term sheets to the fundraising process, governance, and more. In this video, … Uncategorized book launches

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Startup Professionals Musings

SEPTEMBER 14, 2010

Remember a term sheet agreement is not a deal until the check clears. However, there is no set pattern of terms an entrepreneur might be able to anticipate from an angel, either. Your best strategy is to bring your own term sheet to the negotiation as a starting point. When a company is at its earliest seed stage, the terms tend to be the least complex. Tags: entrepreneur startup angel investment term sheet business

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Both Sides of the Table

SEPTEMBER 30, 2015

What Can You Do if a VC Pulls Their Term Sheet? A term sheet is not a legally binding document. So if you’re a VC – you better have a pretty damn good reason for pulling out of deal after offering a term sheet. I was asked to answer this exact question on Quora and I did so some time ago. The beauty of evergreen content is that it resurfaces all the time and it is as relevant today as it was years ago when I answered it.

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Feld Thoughts

NOVEMBER 7, 2011

For some time Jason and I have felt that VC’s have had an unfair advantage when it comes to understanding term sheets. So a few years back we wrote a whole series of blog posts (the Term Sheet series ) which became the basis for the book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. The result is Veri’s Understanding Term Sheets. Term Sheet venture deals veri

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Mucker Lab

JUNE 23, 2014

There is no word more sacred and yet over-used than “term sheet” in the entrepreneurial circle. The pursuit of the mythical VC term sheet has blinded entrepreneurs from the real goal of building a business: revenue, customers, users, engagement and retention. Securing a term sheet is about more than money — more than survival.

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ithacaVC

DECEMBER 9, 2013

We (Cayuga Venture Fund) just signed up a term sheet with a new company (Company X). Rather I want to briefly comment on the process leading up to the term sheet and next steps. I use the term “pro forma” as often there are equity issues that need to be resolved prior to the deal closing that are NOT currently reflected in the company’s current cap table (like planned grants to advisors, co-founder true ups, etc.).

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Gust

OCTOBER 17, 2011

Remember a term sheet agreement is not a deal until the check clears. However, there is no set pattern of terms an entrepreneur might be able to anticipate from either. Your best strategy is to bring your own term sheet to the negotiation as a starting point. When a company is at its earliest seed stage, the terms tend to be the least complex.

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Hunter Walker

APRIL 20, 2014

And your term sheet waits at the bottom. Still lots of hard work and good fortune to close the deal, but your term sheet is right on the other side As the number of Homebrew companies grow, some are preparing for a Series A in 2014 (we’ve backed more teams than are currently public on our website). While very few people start companies simply because they like to meet with VCs, I don’t approach fundraising as simply a ‘necessary evil.’

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The Startup Lawyer

JANUARY 10, 2011

There’s a lot of advice about (1) how to attract VCs, and (2) how to negotiate a venture capital term sheet. Both sets of advice tend to ignore the gap between an investor’s expression of investment interest and your startup’s receipt of the term sheet. I refer to this waiting period as “term sheet purgatory.&#. Term sheet purgatory can seem like is an eternity for a startup, although it may last from one week to over one month.

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Genuine VC

APRIL 29, 2013

all talk about the best way for entrepreneurs to optimize their fundraising process with the end-goal of receiving a term sheet. It’s often spoken as if the second that magical term sheet document is in hand, the process is over. Agreement of key terms between entrepreneur + VC firm. Some VCs merely view term sheets as “marketing documents.” Entrepreneurs pushing for a term sheet from one firm to use in leverage with other firm’s negotiation.

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Early Growth Financial Services

MARCH 13, 2014

getting the first term sheet can be a critical milestone in nurturing a successful business. Things to keep in mind: Anticipate investors’ concerns and information requirements; Be aware of the pitfalls; remember that all agreements are Conditional, with the terms subject to change. What is a term sheet? Valuation terms Every term sheet contains certain key elements, … Continue reading → Equity / Debt / Venture Funding

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This is going to be BIG.

MAY 27, 2014

Last week, for just the second time ever, I passed on an investment opportunity because of the terms of the deal--both the price and the legal structure of the agreement. It was a company whose product I believed in and whose founder I liked, but a firm lobbed in a term sheet at a price 33% higher than what I had offered using a very light agreement meant for a much earlier stage company. They even tried to change their Terms of Service in the middle of the alleged scam.

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Both Sides of the Table

MARCH 17, 2012

The very first time I ever negotiated a term sheet (and then legal docs for closing the round) I found the experience very frustrating. He marks up the term sheet. Seems like the term sheet will be done in a day or so. The VC mostly to come back and say some version of, “In all of the 50 deals we’ve seen in our portfolio we’ve never seen this term approved.” I’ve started a series on negotiations in startups.

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The Startup Lawyer

AUGUST 24, 2010

Just like the preferred equity financing process, the convertible debt financing process can start with a term sheet, rather than a full set of financing documents. A convertible note term sheet is beneficial because it postpones a lawyer from cranking out a full set of docs until consensus is reached regarding convertible debt offering’s material terms. It also makes any potential back-and-forth on terms easier to manage.

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Scott Edward Walker

JULY 7, 2011

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. VC Issues conversion cumulative dividends dividends liquidation preferences preferred stock redemption redemption rights term sheets vc venture capital venture capital term sheets walking dead

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Gust

JULY 25, 2012

Whether we’re founders or investors, we focus on terms and percentages as determining control. I’m not suggesting either investors or founders get glib about it and pretend the terms aren’t extremely important. Invested Interests AVC.com Fred Wilson term sheetFred Wilson of Union Ventures writes Entrepreneurs Have Control When Things Work, VCs Have Control When They Don’t on his AVC blog.

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Scott Edward Walker

JUNE 9, 2011

Introduction This post originally appeared as part of the “ Ask the Attorney ” column I am writing for VentureBeat ; it is another installment of my ongoing series regarding venture capital term sheets. VC Issues conversion rights investors liquidation preferences mandatory conversion rights protective provisions term sheets valuation vc venture capital

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Berkonomics

MAY 15, 2014

A good example was during the negotiation of a term sheet. These usually involve a handful of angel investors, and a few entrepreneurs, who all want to build the very best term sheet for their exciting nascent enterprise. To finalize a term sheet, everyone involved must come to an agreement on some fundamental principles which will have a profound effect on the future of the company. By Basil Peters.

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The Next Web

FEBRUARY 7, 2015

In the introductory post to my term sheet guide, we covered a general introduction to term sheets and the trade-off between high valuation and complex investment structure, as well as focused on the basics of a convertible loan. Now we’ll shed some light on terms in a standard equity round term sheet and provide some context as to how we at Credo Ventures look at each of them. Andrej Kiska is an Associate at Credo Ventures.

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Diego Basch

FEBRUARY 28, 2012

We could have insisted on a term sheet, even though term sheets are non-binding. I believe the startup should have pushed for the term sheet as soon as possible. Either the acquirer would have said no (end of story right there), or the sheet would have been signed. A term sheet increases the likelihood that the acquisition will go through, even if it’s non-binding. I read this story yesterday about a failed startup acquisition.

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Early Growth Financial Services

DECEMBER 4, 2014

But do you know what to do once you’re asked to sign a term sheet? And a good lawyer can be a real advocate for you: by keeping negotiations on track, explaining terms, and making sure any deal you sign doesn’t have problematic (and costly) clauses that could leave you at risk. You came, you pitched, you conquered. Congratulations! Let me say that first, you should have already retained a good startup lawyer. Most investors will expect this.

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Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. and walked through each proposed term and why it is or isn’t important. Non-financial terms affecting Risk.

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Tim Keane

MAY 16, 2010

A philosophy of valuations and term-sheets. Several months ago, I'd posted an article about term-sheets.  A Philosophy of Valuation and  Term Sheet Calcs   the accompanying spreadsheet.  the entrepreneur and the investor, can get aligned on terms that hold each side responsible for what it says it will do, and this process makes these promises explicit, the relationship begins on a solid footing. 

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The Startup Lawyer

APRIL 2, 2014

My firm and Tech Wildcatters are co-hosting a live mock Series A term sheet negotiation on April 25th from 1-3pm. The event will take place at Tech Wildcatters at 2700 Fairmount St in Dallas Texas. Brad Hunstable, founder and CEO of Ustream, will play the role of the startup founder and a “TBD” VC will […]. Startup Lawyer

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Early Growth Financial Services

NOVEMBER 13, 2012

What is a term sheet, and why should you care about it? Questions about term sheets? Ask in comments below, or contact Early Growth Financial Services for help understanding your term sheet, and other financial support. Related Posts: Seven Things You Need to Understand—and Care About—In a Venture Capital Term Sheet 9 Ways to Negotiate Your Best VC Terms Calculating Your Equity Value.

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The Next Web

FEBRUARY 15, 2015

If you haven’t read the first part on equity term sheets, I strongly recommend doing so before moving on. For a general introduction to term sheets and the trade-off between high valuation and complex investment structure, please refer to the introductory post to the guide. Let’s dig into the remaining set of terms entrepreneurs can typically find in an equity-round term sheet, which the first post didn’t cover.

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Feld Thoughts

FEBRUARY 14, 2010

Over the years my partner Jason Mendelson and I have heard from numerous people that they’ve been exposed to our Venture Capital Term Sheet Series as reference material in a college course. If you’ve used, or encountered, our Term Sheet series in a college (undergraduate or graduate) course or any other teaching / seminar environment, can you leave a comment below with the information (school / program / year / professor) or email me the information ?

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The Next Web

FEBRUARY 1, 2015

Andrej Kiska is an Associate at Credo Ventures. In the past five years, seed-stage investing has experienced a boom. In North America, seed funds now represent 67 percent of all VC funds, up from 33 percent in 2008. The CEE region is no different: according to European Private Equity and Venture Capital Association, the number of seed deals has increased 19x over the past four years.

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Genuine VC

OCTOBER 2, 2012

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.” But frequently, there is time spent negotiating business terms which weren’t specified in the tern sheet itself.

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Rob Go

DECEMBER 14, 2016

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. We have never signed a term sheet that we did not follow-through on, and that is not at all uncommon in venture investing. In the M&A process, an LOI feels an awful lot like a term sheet.

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Feld Thoughts

DECEMBER 28, 2010

On the heels of all the noise around Groupon’s $ 100m financing at a $7.5b (billion) post valuation, I thought I’d put out a call for “old VC term sheets – prior to 1990.&#. The basis for the book comes from the Term Sheet series that Jason and I wrote on this blog in 2005. As part of this, I’m looking for some early VC term sheets.

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www.founderinstitute.com

MARCH 2, 2010

Its thinking about how we can serve your long-term interests, and not just the problem of the moment. New "Plain Preferred" Term Sheet 08/24/2009: by Adeo Ressi Public: TheFunded Founder Institute has just released a new "Plain Preferred" term sheet with support of the blogosphere, including top-rated venture capitalist, Fred Wilson. Chris Dixon posted about an ideal term sheet for first round funding, which started an blogosphere discussion about terms.

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www.quora.com

JANUARY 16, 2011

Find Questions, Topics and People Add Question Add Question Venture Capital Venture Capital Term Sheets Startups Term Sheets What are examples of good startup term sheets? I did a short video at BothSidesoftheTable th at talks about the key terms in the term sheet you need to know about AND how VCs calculate valuation differently than entrepreneurs and what to look out for. Brad Feld does the best blog term sheet series.

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The Next Web

APRIL 6, 2013

The five suggestions below are designed to help facilitate the investment process which may lead to a more expeditious term sheet and teach entrepreneurs to think more like an investor. In fact, we engaged a leading US investor who gave an initial terms sheet to a very promising startup with a ‘rockstar CEO’, to then retract the $1.5 My daily work consists of connecting innovative A round startups with potential investors or strategic partners.

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The Startup Magazine

SEPTEMBER 15, 2020

It is a type of financing that investors can provide to startups and small businesses which are believed to have the potential for success in the long term. Understand VC Term Sheets. Many companies need venture capital funding, including startups.

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Startup Company Lawyer

APRIL 22, 2009

Always looking for ways to better serve the entrepreneurial community, Wilson Sonsini Goodrich & Rosati is pleased to announce the release of the WSGR Term Sheet Generator , a publicly available online tool that allows entrepreneurs and investors to generate an initial draft of a term sheet for a preferred stock financing. By answering a series of questions, users are guided through the principal variables contained in a venture financing term sheet.

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www.feld.com

MARCH 2, 2010

startupcto

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K9 Ventures

SEPTEMBER 20, 2018

But, investors routinely put a clause in the term sheet for the financing that says “Company will pay, at the Closing, reasonable legal and due diligence expenses of Investors in an amount not to exceed $30,000,” or, “Company to pay investor counsel fees, not to exceed $30,000,”, or even in the form Series Seed documents: “Company to reimburse counsel to Purchasers for a flat fee of $10,000.”. Legal by Nick Youngson CC BY-SA 3.0 Alpha Stock Images.

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Startup Professionals Musings

APRIL 22, 2012

If the term sheet process turns to pure torture, it may be time to respectfully bow out. If they ask superficial questions or don’t understand business, a successful long-term relationship is not likely. Also, make sure your lawyer writes the initial investment document or term sheet - not the investor. entrepreneurs startups term sheet sharks angel investors business

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Feld Thoughts

OCTOBER 28, 2016

The second, on why term sheets even exist, came out of our realization that many of the investments we’ve made in the past few years were done with handshakes and email outline of terms, rather than term sheets. Term Sheet book venture dealsThe third edition of Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist is going to print and pre-orders are up on Amazon.

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