Term Sheet Example

The deal terms, not the valuation, determine the outcome of a company investment transaction.

In entrepreneur circles and discussing venture capital investments, there is an undue focus on the company’s valuation, disregarding the other deal terms.  Those terms can have a significant impact, often dwarfing the valuation discussion.  The crafting of an investor deal is probably the best example of the importance of the saying:  “You specify the price, I’ll specify the terms.”  Only by examining all deal terms can someone understand the true valuation and equity distribution when the company is sold or goes public.