3 ms·
Decoding the term sheet
Hey - made this post to explain the term sheet. Would love any feedback.
- iterable 13y agoHey - made this post to explain the term sheet. Would love any feedback.
- dredmorbius 13y agoNuke the interstitials.
- lmm 13y agoI haven't finished reading yet but the page itself is really beautiful. (Except the flying thing on the right, which is annoying).
- iterable 13y agoThanks! Really appreciate it.
- JacksonGariety 13y agoNot sure if quoting The Social Network and showing screens from it helps your credibility.
- thejteam 13y agoThe other day I was at a presentation on pitching investors and the presenter, a veteran entrepreneur and investor, recommended having your own set of term sheets ahead of time to present to investors. Is this a good idea? At least for pre-VC investment, which was what this presentation was primarily about.
- deleted 13y ago[deleted]
- iterable 13y agoHey - by 'pre VC investment' I assume you mean raising a first round of tens or low hundreds of thousands - basically enough to hack out the first version of the product. In this case, yes, you should generate your own term sheet, and make it very reasonable (we give you some guidelines in the article) so as not to deter investors. One reason for this is that due to your stage and the amount you are raising, you are unlikely to have a 'lead' investor in the classical sense. Also - you should definitely raise this round as a convertible note. It is cheaper, faster, and much easier to 'raise as you go'.
- deleted 13y ago[deleted]
- iterable 13y agoHappy to answer any fundraising questions as they arise - hit me at contact@thesecretofraisingmoney.com - name is Michael
- bjoernlasseh 13y agothx Michael
- chkpt 13y ago“Major investors will have the right to participate on a pro rata basis in subsequent issuances of equity securities Explanation: Allows current investors to retain their current ownership percentage in future financing rounds.” Is this right? My understanding was that pro-rata = if an investor owns (say) 20% of a company, then they get to participate with up to 20% of the total of any subsequent financing. This may or may not maintain them at their original 20%.
- wkneepkens 13y agoIt is right, example: US$100 "company", with one investor owning 20% (US$20) New round of US$50 and the investor uses pro-rata right of 20% . He takes US$50 * 0.2 = US$10 out of the round. Now owns US$30 worth of equity in the US$150 valued company = 20% Obviously valuations, various investors, various rounds, convertibles, etc. can complicate matters. Lastly an investor could also only take part of his 20% right and would then get partially diluted.