Termsheet! The word evokes both joy and confusion among entrepreneurs. There is the prospect of funding that will facilitate milestones and gazillion dollar revenues for the company; but then, there is also the question of the terms and their effect on exit payouts to founders, investors and employees.

 

With Brad Feld & Jason Mendelson's "Venture Deals" as my guide, I have made an attempt to demystify termsheets. I highly recommend this book.

 

Before I get started; in the startup context, a termsheet defines the terms of investment betwen a startup and an investor (e.g.VC). The other important document is the letter of intent (LOI), and if you have encountered it, there may be a reason to celebrate. This document details terms between a startup and the accquiring party.

 

The squiggly diagrams below are Coggles. Heres how you navigate:

There are many ways to zoom in and out:1] Right Click 2] Long left click 3] [Ctrl] + Scroll

[Ctrl]+Left click on 'Link' will open the link

You can also click here to go through notes on TERMSHEETS & LOI.

Arriving at startups valuations during funding rounds can be a big challenge. Some thoughts on computing valuation prior to a deal.

 

I created this page for a friend who is on quest for VC funding. It's a work in progress. Thanks for your patience.