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What Goes Into a Term Sheet?

Tuesday, August 23rd, 2011 – running time 06:54
Successful entrepreneur and CEO, Jay Adelson, demystifies the start-up process by providing advice, tips, and answering questions. Today he discusses the central points that should be included in an initial term sheet.

Segments

Jay's Chalkboard Notes:

1. A term sheet is an agreement between you and an investor

2. A series of terms you think matter

3. Describes value of the business

4. Includes how much $$ you are getting and what % that translates into

5. Download simple templates at Seed Capital term sheets at SeriesSeed.com

6. There are not a lot of rules when it comes to term sheets

7. In essence, it's a suggestion of $$ and rights to stock

8. When in A & B rounds, term sheets include who is going to be on the board, and whether or not you are the CEO

9. A term sheet is non-binding

10. It's not official until later when everything is finalized

11. Term sheets are currency

12. Once you have one you can compare multiple investors

13. A term sheet gives you leverage

Today's Homework Assignment

Your takeaway assignment based on today's question is to price out and find a good corporate attorney. Get recommendations, and spend $$ on someone who knows their stuff. They will help you negotiate. Be sure to sign a retainer.

05:10

Play

Have a question about launching a business that you want answered?  Submit them to askjay@revision3.com, or upload a video question on our YouTube page. And make sure and follow Jay via Twitter.


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