For real estate, your state’s realtor organization will have standard purchase forms available with a quick google search. With these, a title insurance company, and home inspector, you can easily do a private party real estate deal where everybody has reasonable insurance.
A Standard and Clean Series A Term Sheet
131–140 of 172 posts
Re: A Standard and Clean Series A Term Sheet
#132The only surprising bit for me was the dividends. Most terms sheets I've seen don't require the 6% dividend. Seems weird.
I was surprised by the % being included as I figured that would be decided by the board at the time a divindend is approved. I have no idea why a % which would be defined before knowing the details of the companies financial situation. I wonder if this is more of a protection against the board deciding on a dividend when it is in the best interest in the near term for the company to keep money in the bank. So definin…
Am also confused by this (and hoping this comment would get some love!)
Re: A Standard and Clean Series A Term Sheet
#133Former 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…
Could you link to some of these resources , their start up school doesn't really include documents such as this.
Re: A Standard and Clean Series A Term Sheet
#134The only surprising bit for me was the dividends. Most terms sheets I've seen don't require the 6% dividend. Seems weird.
I was surprised by the % being included as I figured that would be decided by the board at the time a divindend is approved. I have no idea why a % which would be defined before knowing the details of the companies financial situation. I wonder if this is more of a protection against the board deciding on a dividend when it is in the best interest in the near term for the company to keep money in the bank. So definin…
The dividend provision just says that the common won't get a dividend unless the preferred has already received their 6% (per year). It doesn't mean that you couldn't issue the preferred a smaller dividend--that would just count toward the 6% but still wouldn't allow the common to get a dividend until the remainder is paid out to the preferred.
It's relatively rare for venture backed startups to issue ordinary course dividends anyway (for the reason you stated, funding development/growth is typically seen as a better use of company cash to try to get to a big exit or IPO, etc.).
Re: A Standard and Clean Series A Term Sheet
#135Earlier quoted context omitted.
Better yet, embed the PDF in an inline iframe so text can be copied, highlighted, etc.
A downloadable version of the doc is linked directly above the image. That does the job nicely, since it allows you to immediately edit.
newer browsers can actually just embed PDFs natively[0] in an iFrame, but there are more fault-tolerant ways to do it that provide a better ux.
Cool note, Google Drive provides an embed code for PDFs[1] which I've found to be useful.
Filestack also provides a great API for viewing PDFs in apps/browsers[2] that I use all the time.
0- https://pdfobject.com/static/
1- https://alicekeeler.com/2016/06/05/google-drive-embed-pdf/
2- https://www.filestack.com/docs/concepts/transform/#document-...
Re: A Standard and Clean Series A Term Sheet
#136Earlier quoted context omitted.
It can be enforced with a lawsuit like this, when an investor doesn't care as much about their reputation with founders: https://www.bloomberg.com/news/articles/2018-04-25/crypto-bi...
I'm sorry but that does not answer my question at all. It's quite obvious that a legal dispute may be settled in court. We do not know the details of the case you quoted so it's difficult to comment. I'm asking specifically about the template that is posted here because it looks like a simple promise and, as mentioned, these have no value in many jurisdictions. I suppose I'm asking how it works in Delaware, basically…
> In many jurisdictions of the United States, promissory estoppel is an alternative to consideration as a basis for enforcing a promise. It is also sometimes called detrimental reliance.
Wiki: https://en.wikipedia.org/wiki/Estoppel#Promissory_estoppel_2
PDF: https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?refe...
Re: A Standard and Clean Series A Term Sheet
#137I know this article focuses on founders, but I'd love to see something done in the industry for employees (especially early employees!) as well. One of the former companies I worked at never allowed early exercise and issued standard ISO with 90 day expiration upon leaving, which is unfortunately essentially the analogue of "standard and clean" when it comes to employee compensation. By the time I was ready to leave…
This sucks. Sorry to hear they did that to you and I’m glad you made out ahead of the game. A company I worked with had the opposite approach — they not only allowed for early exercise, they allowed for immediate exercise of all unvested shares with an 83(b) election (and converted the vesting schedule into a clawback schedule). AND they offered a bonus for the amount of the exercise price. So in effect, if you had $…
What a great step in the right direction!
The $40k+ you could owe in taxes is still a problem. Perhaps the company could give you an open-ended loan of the $100k (that you paid back if you returned the stock, or after a good exit).
Re: A Standard and Clean Series A Term Sheet
#138Do "A Standard And Clean Employee Equity Offer" next!
Seriously.
Re: A Standard and Clean Series A Term Sheet
#139This term sheet template is very investor friendly primarily because of the lack of detail.
The Company has very little leverage after a term sheet is signed especially given a standard no-shop provision. You want to reduce the number of items that need to be negotiated later in the process as much as possible.
This not only reduces the likelihood of having to agree to a less than favorable term that was not addressed in the term sheet, but also reduces legal costs (which the Company is paying).
The post does make note of this:
> Some great investors still send longer term sheets, but this has more to do with their preference for going a bit deeper into the details at this stage, rather than deferring this until the definitive documents. The definitive documents are derived from the term sheet and are the much longer (100+ pages) binding contracts that everyone signs and closes on. It’s common to negotiate a few additional points at this stage, though deviation from anything explicitly addressed in the term sheet is definitely re-trading. Also, in a few places, this term sheet refers to certain terms as being “standard.” That may seem vague and circular, but term sheets frequently do describe certain terms that way. What that really means is that there’s an accepted practice of what appears in the docs for these terms among the lawyers who specialize in startups and venture deals, so make sure your lawyer (and the investor’s lawyer) fit that description.
Re: A Standard and Clean Series A Term Sheet
#140I thought the original SAFE was on casetext.com. Too bad this wasn't loaded there as well.