Term Sheet
A Term Sheet is like a blueprint for an investment deal in the venture capital world. It's a document that outlines the main points of an agreement between investors and startup founders. Think of it as a preliminary agreement that lists important details like how much money will be invested, what percentage of the company the investors will own, and other key business terms. While not the final legal contract, it serves as a foundation for lawyers to create the detailed investment documents. It's similar to a letter of intent or memorandum of understanding, but specifically used in startup and venture capital investments.
Examples in Resumes
Negotiated and closed 12 Term Sheet agreements with early-stage startups
Led due diligence process resulting in successful Term Sheet execution for Series A funding
Drafted and reviewed over 20 Term Sheets for seed-round investments
Typical job title: "Venture Capital Associates"
Also try searching for:
Where to Find Venture Capital Associates
Professional Networks
Job Boards
Industry Resources
Example Interview Questions
Senior Level Questions
Q: How do you negotiate key terms in a term sheet when there's pushback from founders?
Expected Answer: Should demonstrate experience in finding compromise solutions, understanding both investor and founder perspectives, and knowledge of standard market terms. Should mention specific examples of terms often negotiated like valuation, board seats, and liquidation preferences.
Q: What are the most important protective provisions you look for in a term sheet?
Expected Answer: Should discuss anti-dilution protection, right of first refusal, voting rights, board representation, and explain why these provisions matter for protecting investor interests.
Mid Level Questions
Q: What are the essential elements that should be included in a term sheet?
Expected Answer: Should mention valuation, investment amount, ownership percentage, voting rights, board composition, and liquidation preferences as key components.
Q: How do you evaluate if term sheet conditions are founder-friendly?
Expected Answer: Should discuss fair terms regarding dilution, control rights, vesting schedules, and explain how to balance investor protection with founder incentives.
Junior Level Questions
Q: What's the difference between pre-money and post-money valuation in a term sheet?
Expected Answer: Should explain that pre-money is company value before investment, post-money is value after investment, and demonstrate how this affects ownership percentages.
Q: Why is a term sheet important in the investment process?
Expected Answer: Should explain that it's a preliminary agreement outlining key investment terms, saves time and money by establishing main points before legal documents, and helps avoid misunderstandings.
Experience Level Indicators
Junior (0-2 years)
- Basic understanding of term sheet components
- Financial modeling and analysis
- Due diligence support
- Deal documentation
Mid (2-5 years)
- Term sheet drafting and review
- Deal negotiation support
- Investment analysis
- Portfolio company monitoring
Senior (5+ years)
- Lead deal negotiations
- Structure complex investment terms
- Strategic decision making
- Relationship management with founders
Red Flags to Watch For
- No understanding of basic investment terms
- Lack of financial analysis skills
- Poor negotiation abilities
- No experience with due diligence processes
- Unable to explain different financing rounds
Related Terms
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