NEGOTIATING TERM SHEETS: FOCUS ON WHAT’S IMPORTANT by Matthew Bartus

  • Source link: https://www.cooleygo.com/negotiating-term-sheets/
  • TL;DR: Focus on 3 key issues in your term sheet negotiations
  • How helpful?: 4/5
  • Topic Tags: negotiation, term sheet, rule of 3
  • Relevant questions addressed:
  • Where should I focus my efforts in a term sheet negotiation?
  • Summary bullet points
  • Follow the “rule of 3”
    • Focus your energies on 3 key issues to negotiate
  • If you accept the term sheet “as is” without negotiating, you might actually lose credibility with the VC. This doesn’t mean you should endlessly argue, though.
    • Show the VC that you will stand up for the important issues, and that you know what the important issues are
  • What are the important issues?
    • Valuation/Dilution
    • Liquidation preference
    • Makeup of BoD
    • Protective provisions
    • Founder vesting
    • Antidilution protection
    • Exclusivity

Follow-up Links