Term Sheet Negotiations for Trendsetters Inc
Introduction: The case – Term Sheet Negotiations for Trendsetter, Inc. ... Term Sheets are legally binding contracts and it is imperative for a venture capitalist (VC) as well as the Entrepreneur to thoroughly understand the implications before signing them. ... Please refer to a comparison/analysis of the term-sheets in Appendix A. ... The term-sheet for Mega Funds does precisely this. It values the venture a little more than the Alpha Ventures and at the same time, is less restrictive than the Alpha’s term-sheet. However, Mega’s term-sheet doesn’t describe any pre-money / post-money valuations and there‘s no discussion of compensation committee, severance package details, and key-employee insurance clauses. ... Both the term-sheets appoint Board of Directors identically. However, Alpha’s term-sheet – with 60% votes of the Series-A Preferred shareholders, gives more control to the VC. Liquidation preference with Alpha’s term-sheets – with three times the issuance price for the VC makes it really restrictive and burdensome for the founders to accept. I am more confident with Alpha’s term-sheet for its definitive clauses and restrictive control over the venture through its life. However, since I still have to establish myself as a VC of repute, I can’t afford to use Alpha’s term-sheet as is. ... I have to raise money from limited partners and if I choose Mega’s term-sheet to fund ventures, I would have hard time raising money.
Ratings
by dakota1