What should an entrepreneur look out for when negotiating a term sheet with a VC?


This post is by Jason Lemkin from SaaStr


Click here to view on the original site: Original Post




One simple thing: complexity. 99% of terms and term sheet should be simple and straightforward:
  • price
  • the amount invested (and % ownership for investors / cap table)
  • pool for stock options and employees
  • board construction and seats that are proportionate, roughly, to ownership
  • standard venture terms — pro rata, IPO registration rights, etc.
  • timing (if/when term sheet expires)
That should be all there is, 90% of the time. That’s enough. Professional, experienced start-up investors shouldn’t care about too much more than this. Of course, get a start-up lawyer that has done this 100 times. They know. But mainly, be on the lookout for anything … too complicated. Because the above 5–6 points should be all that matter. And they are pretty straightforward. Folks that make problems for you are often the ones that make the most complicated term sheets. With endless tranches, complex terms, complex hurdles, lengthy timelines, excessive due etc. A bit more here: The 4 Questions Every Founder Should Ask Every VC. That Almost No One Asks. | SaaStr View original question on quora The post What should an entrepreneur look out for when negotiating a term sheet with a VC? appeared first on SaaStr.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.