Understanding VC Term-sheets

Last week, I caught up with Shrijay Sheth from Legalwiz to talk about key aspects of VC term-sheets as a part of Echai’s Fundraising for Startups Series.

Why do we need a Term Sheet?

Term sheet is prepared for 2 major purposes:

  • To Preclude the possibility of a misunderstanding and lessening the likelihood of unnecessary disputes.

  • To Ensure that expensive legal charges involved in drawing up a binding agreement or contract are not incurred prematurely.

What is included in a Term sheet?

The Million Dollar Question. Here’s what’s included in a Term sheet.

  • Valuation of the Company

  • Amount of Investment

  • The % Stake Sought

  • Voting Rights

  • Liquidation Preferences

  • Anti-Dilution Provisions

  • Investor Commitment

  • Exit Rights of the Investors

  • Stock Option Pool

Here’s the Presentation that Shrijay had prepared:

Here’s the full webinar video:

We went through all the key clauses that are typically a part of the Term sheet in the Webinar.

We had about 30 participants on the webinar who asked some brilliant questions. Make sure you don’t miss out on those!

If you have any questions that were not taken up in the webinar, please feel free to ask them in the comments below and I will surely reply.

About eChai.Network:

eChai.Network is a global startup network that facilitates focused local meetups in 25+ global startup cities and enables cross-border collaborations.

You can check out eChai here: https://echai.in/

About Gridle.one

Gridle is a Customer Experience Platform for Agencies and Freelancers. We are a 40 people team servicing over 500 agencies across the world.

You can check out Gridle here: https://gridle.one

About Legalwiz.in:

Legalwiz is an online legal solution partner to handle business legalities right from registering your business to tax filings and even IP registration and regular compliance.

You can check out Legalwiz here: https://legalwiz.in

Until Next Time, Yash.


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