Term Sheet

An explanation of the term sheet in startup fundraising, detailing its role as a non-binding blueprint for investment and the critical balance between economic and control terms.

An exclusivity period prevents founders from soliciting other offers during negotiations. It shifts leverage to the investor, making time management and runway critical for startup survival.

Liquidation preference determines who gets paid first when a company is sold. This article explains the hierarchy of payout, the risks of the ‘double dip,’ and how it protects investors.

Participating preferred stock allows investors to receive their liquidation preference and share in remaining proceeds. This guide explains the mechanics, math, and risks to help founders protect their equity.

Super pro rata rights allow investors to increase ownership in future rounds. This guide explains the mechanics, the difference from standard rights, and the potential risks for future funding.

Pro-rata rights allow investors to maintain ownership percentages in future rounds. Learn how these rights impact your startup’s cap table and fundraising strategy.

A breakdown of clauses that protect investors when company valuations drop, detailing the mechanics of full ratchet versus weighted average and the impact on founder ownership.

Information rights dictate what financial updates investors receive. This guide defines the term, outlines standard reporting requirements, and explains how founders should manage investor expectations.

Pari passu dictates that different classes of shares are treated equally during liquidation. It ensures investors share proceeds pro rata rather than strictly by seniority.

Due diligence is the audit phase of a deal. This article explains what investors verify, how to prepare your data room, and why you must investigate your investors in return.

Pre-money valuation is the value of your company before investment. It is the critical number that determines how much equity you must give up to secure capital.

An overview of pay-to-play provisions detailing how they compel investors to participate in future rounds or forfeit rights, specifically during challenging financial periods.

Warrant coverage is the percentage of a loan value issued as options to a lender. It acts as an equity sweetener in venture debt deals to lower immediate interest rates.