As uncertain as the world continues to be, the venture capital ecosystem has been showing promising signs. Over the past 12 months of recording Axios venture data, July 2020 captured…
Startup Term Sheet Template from Y Combinator
Term sheets can be intimidating as a first time founder. As it is likely the first time you’ve seen a term sheet, the intricacies of the deal can be difficult to understand. You can spend hours trying…
Term sheets can be intimidating as a first time founder. As it is likely the first time you’ve seen a term sheet, the intricacies of the deal can be difficult to understand. You can spend hours trying to understand a term sheet and what exactly makes up a “good” term sheet. As the team at YC writes, “we’ve noticed a common problem: founders don’t know what “good” looks like in a term sheet.”
If you’re looking for a more thorough breakdown of a term sheet check out our blog post, “Navigating Your Series A Term Sheet.”
In order to help founders best understand their term sheets many firms and individuals have come up with their own term sheet templates. In fact, many investors and founders now use a 1 page term sheet template.
As the Y Combinator team put it, “It may be surprising to see everything covered in a single page. This wasn’t always the case, but became common over the last decade as some investors decided to make their term sheets more user friendly by shortening the legalese as if to say, “We aren’t going to get bogged down in the minutiae. We’re going to make this easy, friendly, standard and fast.”
The Y Combinator Term Sheet Template
With thousands of investments under their belt, Y combinator is always a great place to start when looking for startup best practices. The team at YC put together an awesome 1 page term sheet template (with a focus on Series A) that any founder can use. While your actual term sheet may look different the Y Combinator Term Sheet template is a great place to get familiar with the subject.
YC does a great job of breaking down the different components and laying out terms and language that founders should keep their eye out for. Check out their term sheet template here.
The One Page Term Sheet Template from Ben Milne
Ben Milne, Founder of Dwolla, has spent his fair share of time navigating term sheets. Ben is a Midwest founder and has seen the amount of time midwest founders and investors waste negotiating term sheets. As he put it, “Midwest investors and founders lose a lot of time trying to figure out the term sheet. Sometimes, they lose even more time deciding what the terms should be.”
In order to help bring some guidance to both startups and investors, Ben put together a one page term sheet template. You can check out the template below:
Hopefully these term sheet templates can help as you wrap up your fundraising journey. As always, we recommend consulting with your lawyers as you navigate your term sheet and fundraising documentation.
If you have any questions about the rest of the fundraising process check out our Founders Forward Newsletter. We search the web for the best tips to attract, engage and close investors, then deliver them to thousands of inboxes every week. Subscribe to the Founders Forward here.