So what does a VC Term Sheet actually look like?
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Median Valuations by Stage ( Source: PitchBook) Pros / Cons of Fundraisingįrom the perspective of an entrepreneur and existing investors, there are several advantages and disadvantages of raising outside capital. In the last few years, however, there has been a noticeable move towards deals of larger magnitude.Īs you would expect, the average deal sizes are significantly larger for later-stage investments, but early-VC investments have been trending up across the board. Historically, deal counts tend to favor earlier stage investments as shown below. Guide to The VC Capitalization Table Funding RoundsĪ VC term sheet is created at each investment round, which is usually designated by a letter: Seed-Stage The VC term sheet will then flow into the VC capitalization table, which is essentially a numerical representation of the preferred investor ownership specified in the term sheet. The VC term sheet is a non-binding legal document that forms the basis of more enduring and legally binding documents, such as the Stock Purchase Agreement and Voting Agreement.Īlthough short-lived, the VC term sheet’s main purpose is to lay out the initial specifics of a VC investment such as the valuation, dollar amount raised, class of shares, investor rights and investor protection clauses.
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The term sheet is short, usually less than 10 pages, and is prepared by the investor. The VC Term Sheet establishes the specific conditions and agreements of venture investments between an early-stage company and venture firm.