Profile image
By Points and Figures (Reporter)
Contributor profile | More stories
Story Views

Last Hour:
Last 24 Hours:

The Terms on a Term Sheet

Friday, February 24, 2017 5:09
% of readers think this story is Fact. Add your two cents.

One of the things we try to do at WLV is be very friendly to entrepreneurs.  A lot of people say that, but we really try.  For example, we try to give really honest feedback.  When some VC firms pass they just say, “not for us” or give you some vague answer.  We try to tell you exactly why we passed.  The entrepreneur may not hear, or like the answer.

The other thing we try to do is get to a really fast no.  It doesn’t do any good for anyone to just be out there in the ether. Fast no’s are good for entrepreneurs because they don’t waste their time.

I was reading about Snapchat’s initial fundraising round.  Lightspeed put in terms that became very difficult for the founders.  Snap was unable to raise from certain firms in later rounds because of it, and it drove down valuation.  The terms were great for the VC.  A $485k investment is going to turn out to be $1B.

Evan Spiegel said, “If a VC tells you the terms are standard, they either don’t understand them or they know that they are friendly to the VC.”

At seed and Series A, it’s really important for entrepreneurs to understand the terms on a term sheet.  That’s why it’s good to have a lawyer that has done some VC work on your side of the table.  Another thing you can do is get the book Venture Deals and read it.  There are all sorts of little terms that seem innocuous but can hurt in later rounds.

It’s business, but it’s a relationship too.  You want to make sure everyone is pulling with the same rope when you do a deal.

Having clean term sheets without a lot of junked up stuff in them at seed is very important.


We encourage you to Share our Reports, Analyses, Breaking News and Videos. Simply Click your Favorite Social Media Button and Share.

Report abuse


Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories



Top Global

Top Alternative



Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.