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Term Sheet Negotiations

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Uploaded by on Jul 28, 2009

One of the most important parts of the venture financing process is negotiating the term sheet. Although only 2-3 pages long, term sheets contain summaries of the critical aspects of a financing. Listen to a simulated negotiation between a VC and an entrepreneur, followed by a discussion on the most important terms.

Recorded: February 25, 2009

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Education

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Standard YouTube License

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  • Farb would have failed in an actual negotiation due to his constant interruptions.

  • This is nearly amateur hour for both. I agree this is hypo but did either side study in advance?

  • Solution 1: Entrepreneurs must consider involving their experienced advisors at this stage of funding. Lawyers will be expensive and their loyalty may be questionable.

  • VC is a seasoned professional who spent most of their career negotiating. They are coming from the position of high strength - lots of money, options to invest, he is not betting his career on one investment.

    Entrepreneurs come from the point of lots of weakness. Most of them are not qualified to be good negotiators - young, energetic (unnecessary disclosures of information) and spent most of their short professional careers as a geek. Only negotiation experience is talking to their boss.

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