Demystifying Term Sheets

The Term Sheet. The pot of gold at the end of the rainbow, the prize that follows hundreds of pitches and endless networking. While this hyperbole may be a bit extreme, to many inexperienced aspiring entrepreneurs the term sheet is viewed with such reverence, and is veiled in about as much mystery. Thankfully, there are a lot of smart, experienced people who have been to the end of the rainbow numerous times and they have shared that knowledge online. Here is an annotated list of some of the best sources of info for demystifying term sheets:

  • The Gold Standard: Brad Feld’s Term Sheet Series is a very thorough series comprising 20 posts on all aspects of term sheets. This is the place to start to get a solid background on the basics.


  • Term Sheet Hacks: Now that you have the basics down it’s time to learn the hacks to get the best deal with your term sheet.


  • Avoiding Term Sheet Problems: Fred Destin has a great two part post on VC terms to avoid. Part One Part Two


  • Negotiate but don’t over-optimize: Now that you’ve learned the hacks and things to avoid, Matt Bartus reminds you not to blow up a deal by trying to tweak and negotiate your term sheet too much. He recommends only choosing three issues to negotiate.


  • Finally, get your hands on some documents: To really get familiar with term sheets it can be useful to actually read one. There are examples of investor documents from Series Seed or from Y Combinator that are being used more and more in angel deals and other seed funding. They are a good place to get a feel for what the documents actually look like.



Whether you are in the process of signing a term sheet, or just want to know more about the process, these articles are a great place to start. Please remember though that every situation is different and that this isn’t legal advice. Be sure to check with your attorney on legal matters such as these.

May 17, 2010 | Geoff | View Comments

Angel Investing Thoughts

In the last few weeks I have seen a lot of posts and updates on tech blogs and Twitter feeds about angel investment. It seems that a lot of angel deals are getting done right now and there are a lot of great resources out there for those aspiring to raise angel money. I thought I would pass along some of these resources and attempt to address if there are parallels that could exist in the life sciences.


AngelList is a resource from Venture Hacks to connect start-ups with Angel investors. This appears to be an incredible way to access a large number of angels all in one place, and it serves as a way for angels to get intros to start-ups that are vetted by Venture Hacks first. While this is obviously tech specific, it seems like this model could work in the large active life science angel community as well. There are large angel groups, like the Life Science Angels, that use a meeting approach to put deals in front of investors. I think a virtual model could be a very interesting addition to life science angel investing.


MicroVentures is a recently-launched company that is taking a Prosper or Kiva approach to equity investing in start-up companies. It acts as a service to allow start-ups to raise a syndicate from a large number of investors. It also allows angels to possibly invest less money in larger syndicates. There may be some disadvantages to using this sort of method for raising angel funding, but it is always good to have alternative sources of funding. The platform isn’t up and running yet, but it will be interesting to follow their progress.


Thomas Korte is a tech angel investor that has some great posts about his angel investments. His posts on how to cold email or how to meet important people in Silicon Valley are great advice for any entrepreneur looking for funding, regardless of field.


I have a hard time finding any life science angels that blog or that use Twitter. I’ll keep looking and pass them along. If anyone knows of any angels that do so please post it in the comments or contact me.
This is just a small subset of things I have seen in the last few weeks. I hope to do future posts on funding that may include, venture capital bloggers, seed accelerators and term sheets. Stay tuned.


Photo credit: http://www.flickr.com/photos/terrio/ / CC BY-NC-SA 2.0

April 6, 2010 | Geoff | View Comments