are there any good book with lots of examples of term sheet/valuation math for startups?
Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, Brad Feld.
A Standard and Clean Series A Term Sheet
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Re: A Standard and Clean Series A Term Sheet
#122Jason and I are happy to answer any questions people have about this document: why we included the terms we did, how to think about using, etc.
I was under the impression that more and more founders (and even investors) are speaking out against the idea of legal fees paid by the founders. Is that only at the seed stage and acceptable at Series A?
To me it is totally unreasonable. We had a series A investor that required that. Their attorneys poked around and argued about every little thing and charged us $1200 an hour. They even had a $50k cap in the documents which they asked the VC to raise once they saw they were going to be able to exceed. The VC of course agreed because it wasn't his money and then proceeded to pressure us to accept it. We had already wasted so much time with these guys and racked up our own legal bills. So we were pretty much at their mercy.
If my company is going to pay your legal fees, then they work for me, not you and I will reserve the right to fire them and find someone really cheap instead.
Re: A Standard and Clean Series A Term Sheet
#123Former founder here. I wish I had had this when I was raising my series A. I lost control of the board at my series A when the VC said that a 2-2-1 structure would be better for everyone. 13 months later, I was fired from the company I had started. The risks are real.
Had I known what a standard, clean series A term sheet looked like, I could have just pointed to this term sheet on ycombinator.com and said - "Make it like that."
I've found the Y Combinator resources to be some of the most valuable resources out there for startup founders. Do yourself a favor and familiarize yourself with what is available. It could help you not get fired from your startup.
Re: A Standard and Clean Series A Term Sheet
#124Does anyone have a link to a great intro on VC for dummies? I keep seeing these kind of posts but not the big picture in blog form. Maybe a thousand words or two, not too detailed.
Re: A Standard and Clean Series A Term Sheet
#125* What should someone do if they get push back from an investor when asked to this term sheet? * If this term sheet is used, can we avoid the legal costs of a Series A?
The legal fees come from the definitive agreement not the term sheet.
Re: A Standard and Clean Series A Term Sheet
#126I love this line: Company: [_______], A Delaware Corporation. Because no one is gonna incorp anywhere else. Despite 90% of SV companies starting in California.
It doesn't matter where the company raising an A started, it is usually incorporated in Delaware. If the company incorporated elsewhere, it will almost always reincorporate in Delaware prior to raising an institutional round. This isn't true for certain international jurisdictions, but within the US, it is a near certainty.
Right, I just thought it was a funny quirk of our legal system.
Re: A Standard and Clean Series A Term Sheet
#127Earlier quoted context omitted.
If the answer to either of the first two questions is yes, where would I go to learn the jargon? (I do know about google, I'm just hoping there's a good resource that has everything so I don't need to search individual terms).
This book is pretty good and reasonably up to date: https://www.amazon.com/Entrepreneurs-Guide-Business-Law-4th/... We used an older edition as a textbook in a Venture Capital seminar back when I was in law school.
Thank you!
Re: A Standard and Clean Series A Term Sheet
#128Earlier quoted context omitted.
If the answer to either of the first two questions is yes, where would I go to learn the jargon? (I do know about google, I'm just hoping there's a good resource that has everything so I don't need to search individual terms).
Venture Deals by Jason Mendelson and Brad Feld is a good overview. If you want to get more technical, the NVCA publishes a list of their own "standard" documents, which go into depth on some of the standard and non-standard provisions and what they mean, but it's not quite as user friendly.
Thanks, I'll take a look.
Re: A Standard and Clean Series A Term Sheet
#129Re: A Standard and Clean Series A Term Sheet
#130Former founder here. I wish I had had this when I was raising my series A. I lost control of the board at my series A when the VC said that a 2-2-1 structure would be better for everyone. 13 months later, I was fired from the company I had started. The risks are real. Had I known what a standard, clean series A term sheet looked like, I could have just pointed to this term sheet on ycombinator.com and said - "Make it…
Yeah, thanks guys!