Term Sheet Questions


0 Votes
1 Answers
911 Views
Why do most seed investors want about 25% of your startup?

How did the industry settle on this figure (between 20 to 25%)?What was the calculation that led investors to this figure if whether a new startup wants to raise $500K or $1M?


1 Votes
0 Answers
691 Views
Do founders get another another cliff after a round of financing?

Assuming you have been running your startup for over a year and now looking to raise a round of funding. Will investors require you to start again with a cliff? I do understand that all co-founders...

asked May 23 '14 at 23:14
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Carlos Newton
7 points

2 Votes
1 Answers
775 Views
Why do entrepreneurs have to pay the large legal fees for VCs when raising money?

Apart from my own legal fees associated with raising money, I just learnt that it's standard practice for the startup to also pay the VC's legal costs. Which can run into tens of thousands of...

asked May 9 '14 at 14:42
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Ruth Smallwood
12 points

0 Votes
0 Answers
455 Views
How to structure debt financing without using equity?

What are some common debt-financing terms to offer investors to make it attractive for them to invest?Lets say I want to raise a marginal amount such as $300K (marginal as compared to what most...

asked Apr 16 '14 at 17:11
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Dominic Graham
2 points

0 Votes
0 Answers
477 Views
standard liquidation preference with VC and angel deals

What standard liquidation preference you get these days as part of VC and angel deals? 1X, 1.5X (to cover the interest of the investment) , 3X, 5X... For example, in a investment of 250K thanks...

asked Oct 27 '13 at 04:10
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Mga
21 points

2 Votes
3 Answers
504 Views
Term sheet condition states we have to use the investor's law firm

Our company has just received a term sheet for a convertible debt investment. One of the clauses states that we have to pay the fees for drafting the agreements (which I understand is normal), but...

asked Apr 25 '13 at 07:20
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Phil
114 points

4 Votes
2 Answers
770 Views
Consequences with investors if company doesn't meet agreed milestones

I have a few questions about promised milestones to investors. Is it common to include very specific milestones in the term sheet? What are the consequences if you fail to meet them? Losing Board...

asked Oct 19 '12 at 05:02
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Wewill See
53 points

3 Votes
2 Answers
714 Views
What does anti-dilution protection mean in a term-sheet?

My question is in the context of a Term-sheet. I want to know what does anti-dilution preferences mean?

asked Oct 18 '12 at 05:36
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Lisa Howard
116 points

0 Votes
1 Answers
567 Views
Meaning of Automatic Conversion in Series AA TermSheet

There is a clause Automatic Converstion in Series AA termsheet of Y-Combinator which says Each share of Preferred will automatically convert into common stock, at the then applicable conversion...

asked Aug 30 '12 at 20:28
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Gaurav Agarwal
107 points

0 Votes
3 Answers
790 Views
VC term-sheets: Liquidation preference + capped participation clarification

I was reading "Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist " by Brad Feld and Jason Mendelson. It's a pretty good book but some parts aren't obvious, like the one below...

asked Dec 28 '11 at 18:00
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Sid
649 points

3 Votes
2 Answers
870 Views
Can you explain this angel Investment term sheet?

My startup received a Terms Sheet from an investor and my co-founder and I are trying to figure out if they are saying that they are going to want 30% of our profits at the end of every year or if...

asked Dec 9 '11 at 10:04
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Tom Delaney
16 points