What to Expect: Negotiating Your Term Sheet

Negotiating Your Term Sheet

The Articles of Association and Shareholders Agreement that underpin a funding round will, between them, contain dozens, perhaps close to a hundred, little things that you, your investors and the various lawyers involved might want to negotiate.

Rather than taking everyone’s time on the minutiae, a Term Sheet is simply a shortlist of the dozen or so most important deal terms (company valuation, number of shares offered, equity split, etc.). The idea is that once you’ve agreed those, then and only then do you move onto the next step (the “long form agreements”) and debate the minor points. 

The question with Term Sheets is who goes first. In some cases your lead investor will want to provide their standard term sheet. In other cases they may be looking for you to take the lead.

SeedLegals transforms the negotiation process replacing negotiations done by swapping redlined Word documents with a delightful Term Negotiator interface that lets you and your investors quickly agree on the key deal terms, and then move to the next stage. Plus, we provide you with data and insight to make informed decisions on every deal term.

The British Private Equity & Venture Capital Association (BVCA) has a fantastic overview of terms and term sheets. Note that their document is targeted at later-stage (Series A) funding rounds, where the term sheets are substantially more comprehensive and complex than you’ll need for a first or seed round.