In 2005, my partner Jason Mendelson and I wrote a long series of posts describing all of the parts of a typical venture capital Term Sheet. We started on 1/3/05 with a post on Price and finished up on 8/23/05 with a post on Indemnification and Assignment.
Of all of the stuff I’ve written over the past four years, my stats continue to tell me that stuff we wrote in the Term Sheet series is some of the most popular content on my blog. As I was writing my post I Blog, I Tweet, But Why I realized that many of you have started reading my blog after 1/1/06 so you might have missed this series.
We’ve seen this series used as the base for a number of college courses, we’ve been thanked by people all over the world for writing it, and we’ve been encouraged to publish a version of it in book form. Maybe someday we will get around to it, but for now it’s still relevant as an original web based life form.
For quick reference, following are the key posts:
- Price
- Liquidation Preference
- Board of Directors
- Protective Provisions
- Drag Along
- Anti-Dilution
- Pay-to-Play
- Dividends
- Redemption Rights
- Conversion
- Conditions Precedent to Financing
- Vesting
- Information Rights
- Registration Rights
- Right of First Refusal
- Voting Rights
- Employee Pool
- Restriction on Sales
- Proprietary Information and Inventions Agreement
- Co-Sale Agreement
- Founders Activities
- Initial Public Offering Shares Purchase
- No Shop Agreement (also Unilateral or Serial Monogamy)
- Indemnification
- Assignment
While the 24 references are a bit dated (we might use Lost or Weeds this time around), I hope you will also enjoy (or at least forgive us for including) a little bit of Jack Bauer.
I try to follow VESTING link in the series list above. Instead, LIJIT.COM replies that "nothing is found". Your blog page is seen but the CONTENT container is empty. Sorry for not being able to pinpoint the issue further.
Comment by Yuri Ammosov — December 26, 2008 @ 2:09 am
Yup – I’m seeing that problem on http://www.feld.com/wp/archives/2005/05/term_shee... Looks like I’ve got a page mapping problem on some of the archive pages. Thanks for finding this.
I’ll try to hunt it down and fix it.
Comment by Brad Feld — December 26, 2008 @ 2:14 am
Brad: tnx. Great to have them restored. You know, I am a professor of entrepreneurship at Moscow's Fiztech (aka Russia's MIT), and I keep using your series as one of teaching materials ever since they were first published. Even though they are totally irrelevant, as none of my students stands a chance to be venture funded, they are still great to see into the funding process and goals.
Comment by Yuri Ammosov — December 26, 2008 @ 2:34 am
Wow – very cool! Glad to be helpful.
Comment by Brad Feld — December 26, 2008 @ 2:41 am
Brad: your texts are simply good stuff so thank you. The Term Sheets manual is more thorough of course but students simply cannot get it – its way over their heads. So we need something popular and plain.
How soon do you think the VC funds will be back to look at round 1 deals for first time entrepreneurs? 1 year, 2 years, 5 years, never again?
Comment by Yuri Ammosov — December 26, 2008 @ 2:47 am
We are actively doing first round investments right now – most of our new investments (which you can see on http://www.foundrygroup.com) are first rounds. A number of the early stage firms (e.g. Union Square Ventures, First Round Capital, Spark Capital, True Ventures) are very active right now. The notion that early stage investing isn’t happening is a misperception.
Comment by Brad Feld — December 26, 2008 @ 2:51 am
And do you also imply first-time entrepreneurs in their 20s?
Comment by Yuri Ammosov — December 26, 2008 @ 3:04 am
Yup – we’ll invest in first time entrepreneurs who are in their 20’s. Fred Wilson at Union Square Ventures has a number of these types of investments also, including Etsy and Tumblr, and has written pretty extensively on his philosophy about entrepreneurs and age on his blog at http://www.avc.com.
Comment by Brad Feld — December 26, 2008 @ 3:08 am
*sign* Good to have so much risk-conscious capital. In Russia, it's FFF or nothing until your company gets a positive cash flow.
Comment by Yuri Ammosov — December 26, 2008 @ 3:14 am
Brad: the links look broken. Is the series relocated anywhere?
Comment by Yuri Ammosov — December 26, 2008 @ 11:31 am
They seem to be working for me. Can you tell me more about the problem you are having.
Comment by Brad Feld — December 26, 2008 @ 11:37 am
Great suggestion. On the list for future posts.
Comment by bfeld — January 7, 2009 @ 1:55 am
Click on the link in the right sidebar below the Recent Readers map titled “Download My Content.” Choose the Category “Term Sheet” and whatever other options you want. That should do it.
Comment by bfeld — January 7, 2009 @ 1:55 am
Thanks for posting these again, these are some of the best resources on the topic anywhere.
Comment by alexander_45451 — January 7, 2009 @ 1:55 am
Hi Brad, I thought you should look very serious and business-like. And i am happy to see actually you don't… haha… / Kehong from China
Comment by Kehong Woo — January 7, 2009 @ 1:55 am
Any chance you could pull all the pieces together into a single document? I'd like to save and share it more easily.
Comment by Art — January 7, 2009 @ 1:55 am
That is a really helpful series. Is there a way you would be willing to do a series about the materials you expect to see from the entrepreneur? A post on projections / cash flow analysis would be really helpful to me.
Comment by jaxn — January 7, 2009 @ 1:55 am