Term Sheets - The 411 On Startups (tm)

Ideal first round funding terms

May

2012

My last 2 posts were about things to avoid, so I thought it might be helpful to follow up with something more positive. Having been part of or observed about 50 early stage deals, I have come to believe there is a clearly dominant set of deal terms. Here they are: – Investors get either ...

Orrick – Start-Up Tool Kit – Term Sheet Creator – Start-Up Forms Library

Sep

2011

There are many items useful to entrepreneurs on the site including: Example cap (capitalization) table spreadsheet Term Sheet Creator Non-disclosure Agreements Employment Agreements Stock Option plans Confidential Information and Invention Assignment Agreement for Employees & Consultants and much more …..

Why Super Pro-rata Rights are Not a Good Deal for Entrepreneurs

Sep

2011

Yesterday I saw a Tweet from Chris Sacca fly by that prompted me to want to write a blog post helping entrepreneurs understand why they should push back against VCs asking for “super pro-rata” rights. I’ll explain what they are and why you should avoid them if you can. A primer on “pro-rata” rights Institutional investors will ...

Term Sheet Generator – WSGR

Apr

2009

This tool will generate a venture financing term sheet based on your responses to an online questionnaire. It also has an informational component, with basic tutorials and annotations on financing terms. This term sheet generator is a modified version of a tool that we use internally, which comprises one part of a suite of document ...

What is upgradeable Series A preferred stock? : Startup Company Lawyer

Sep

2008

Occasionally, I see a new provision in a term sheet, which keeps things interesting for me. I’ve decided to call this type of Series A preferred stock ‘upgradeable’ (after recently realizing that there are economy class plane tickets that aren’t upgradeable despite having system-wide upgrade certificates). The term sheet provides:

Series AA Equity Financing Documents — Y Combinator

Sep

2008

Y Combinator and Wilson Sonsini Goodrich & Rosati are happy to announce the Series AA Equity Financing Documents. Their goal is to make angel funding rounds for startups easier for both sides. These documents were originally created for YC-funded startups to use when raising angel rounds. They seem to have worked well in trial runs ...

Full Ratchet Anti-Dilution Protection : Texas Startup Blog

Aug

2008

The word “dilution” has several meanings in deal making; it is critical to understand the context. An investor in any given round of financing is concerned that the next round could be at a lower price per share than what he is paying this round. Therefore, the investor will insist upon anti-dilution protection. If pressed ...

Down round financings – Harsh Founder Consequences

Aug

2008

A good explanation of how down rounds effect ownership for different kinds of antidilution provisions in term sheets: full ratchet, broad-based weighted-average, and narrow-based weighted-average.