Explanatory Brochure on the Anatomy of a Term Sheet

Description
For many companies, one huge milestone is the achievement of securing investment from angel investors or VCs. However, when it comes to negotiating, entrepreneurs are usually at a disadvantage because they are not familiar with the standard legal terms that usually, VCs and angel investors are very comfortable with.

It is advised that entrepreneurs hire a lawyer to negotiate term sheets, however it is common knowledge that this is not always feasible. This brochure should give entrepreneurs more insight and understanding of the basic terms in early-stage financing so that they are able to better evaluate legal documents independently. The language used is likely to vary, so by having an understanding of the basic terms at least, you should be able to come to your own conclusions about any given term sheet. The model used as a guide has been taken from the NVCA website. It covers the majority of the terms you would expect to come across on an early stage equity financing term sheet. There are also some useful notes included to provide further explanation.

*Originally published on mccarter.com*