Decoding Term Sheets For Early Stage Startups

Investment term sheets always end up becoming a complex topic for early stage startups.

This guide will help founders get familiarised with the first document they receive from an investor as an offer to invest in the company which typically contains everything material in relation to the valuation, investment details, rights of the investor, restrictive covenants and exit commitments. The guide also talks about a new form of CCPS — “iSAFE”.

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Reading this will help startups raising seed or Pre Series A funding prepare for what is coming inevitably and help navigate through the most commonly used terms, the process involved and typical investor asks!

Ultimate Guide To

Understanding how to structure terms to meet the interests of both startups and investors
The crucial terms included in the early stage term sheets and their impact
The process involved and typical investor asks
Importance of various types of shares, capitalisation table & other key terms
How “iSAFE” works
Along with, term sheet templates & more

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Full Chapter Overview

Anatomy Of A Term Sheet, A VC Perspective

Term sheets are the first step in closing a round and the Definitive Documents they feed into. A crisp, unambiguous term sheet that encapsulates principles is key and care must be taken to ensure that it doesn’t mutate into a quasi-Definitive Document. This chapter helps in understanding a document whose legacy will permeate all future operations of the company.

A Quick Guide To Term Sheets & iSAFE

This chapter will help early stage founders and investors alike understand about a new form of CCPS which is termed as “iSAFE”. The iSAFE templates referred to hereinbelow are suggested forms of readily drafted agreements with key investment terms, which can be easily adapted to formalise the arrangement between the investee company and the investors.

Understanding Term Sheet Components, A Lawyer Perspective

Get familiarised with the first document you'll receive from an investor as an offer to invest in your startup. It typically contains everything material in relation to the valuation, investment details, investor rights, restrictive covenants and exits. Reading this will help you prepare for what is coming inevitably, help navigate through the terms commonly used, the process and typical investor asks.

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Written By Industry Experts

Siddarth Pai 3one4 Capital Founding Partner

Roma Priya Burgeon Law Founder

Yagnesh Sanghrajka 100X.VC Founder & CFO