Aug 2 2011

Venture Deals: Chapter 6: Other Terms of the Term Sheet

In this chapter we cover the non-economic and non-control terms in the term sheet. Some matter, some don’t, and context matters a lot. Hopefully we’ll give you plenty of it to use in your negotiation with your venture capitalist.

Up to this point we’ve been exploring terms that matter a lot and fall under the category of economics or control. As we get further into the term sheet, we start to encounter some terms that don’t matter as much, are only impactful in a downside scenario, or don’t matter at all.

This chapter covers those terms, which include dividends, redemption rights, conditions precedent to financing, information rights, registration rights, right of first refusal, voting rights, restriction on sales, proprietary information and inventions agreement, co-sale agreement, founders’ activities, initial public offering shares purchase, no-shop agreement, indemnification, and assignment.

If we’ve worn you down by now and you’ve bought Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, thank you. If not, what are you waiting for?