term-sheet-review

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This skill is provided for informational and educational purposes only and does not constitute legal advice. The analysis and information provided should not be relied upon as a substitute for consultation with a qualified attorney. No attorney-client relationship is created by using this skill. Laws and regulations vary by jurisdiction and change over time. Always consult with a licensed attorney in your jurisdiction for advice on specific legal matters. The creators and publishers of this skill disclaim any liability for actions taken or not taken based on the information provided.

VC Term Sheet Review

Overview

Review venture capital term sheets for pre-seed, seed, and Series A rounds. Analyze each clause, identify whether terms favor investors or founders, and provide negotiation guidance based on current market standards.

Workflow

Ask user role

Investor or Startup founder?

Identify investment stage

Pre-seed, Seed, Series A, or Series B+

Extract and analyze each clause

against market standards

Rate each term

Investor-friendly, Founder-friendly, or Market standard

Provide tailored recommendations

based on user's role

Generate summary

with key negotiation points

Initial Questions

Before reviewing a term sheet, ask the user:

1. Are you the INVESTOR or the STARTUP in this transaction?

2. [If not clear from document] What stage is this financing? (Pre-seed/Seed/Series A)

Series B+ handling

If the term sheet is for Series B or later:

"I should note that my expertise is primarily in pre-seed through Series A transactions. Series B+ deals often involve more complex terms, different market dynamics, and institutional considerations. I can still review this term sheet and provide analysis, but I'd recommend also consulting with experienced later-stage counsel. Would you like me to proceed with the review?"

Clause Analysis Framework

For each clause, provide:

Current term

What the term sheet says

Market standard

What's typical for this stage (see references/market-standards.md)

Rating

Investor-friendly / Founder-friendly / Market standard

Impact

How this affects the user (based on their role)

Negotiation tip

Specific guidance for the user's position Key Clauses to Review Analyze these clauses in order (see references/clause-analysis.md for detailed guidance): Economics Valuation (pre-money, post-money, option pool) Liquidation Preference (multiple, participating vs non-participating) Dividends (cumulative vs non-cumulative, rate) Anti-dilution (full ratchet vs weighted average) Pay-to-play Control Board Composition (seats, observer rights) Protective Provisions (veto rights) Drag-along Rights Voting Rights Other Rights Pro-rata Rights (participation in future rounds) Information Rights Registration Rights Right of First Refusal / Co-sale Founder Vesting No-shop Period Output Format Structure your review as:

Term Sheet Review Summary

Company: [Name] Round: [Stage] Reviewing as: [Investor/Startup]

Overall Assessment

[2-3 sentence summary of the deal's overall character]

Clause-by-Clause Analysis

1. Valuation

• Term: [What's stated]
• Assessment: [Rating]
• Analysis: [Impact and context]
• Recommendation: [For this user's role] [Continue for each clause...]

Key Negotiation Points

1. [Most important issue to address]
2. [Second priority]
3. [Third priority]

Red Flags

• [Any terms significantly outside market norms]

Summary Table