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Anonymous

Hey I am on Medial • 8m

Venture Capital (VC) term sheets often include clauses that can have significant implications for founders and the future of their startups. Below are some critical clauses that founders should carefully evaluate: 1. Valuation and Equity Pre-Money

Anonymous

Hey I am on Medial • 8m

3. Board Composition Ensure a fair balance between founder representation and investor control on the board. Limit clauses that allow investors to unilaterally appoint directors or have veto rights over key decisions. 4. Founder Vesting/Cliffs Re-vesting of founder equity is often proposed. Understand vesting schedules, cliffs, and any potential risk of losing shares if you exit prematurely. --- 5. Anti-Dilution Protection Full Ratchet vs. Weighted Average: Full ratchet protection can significantly dilute founders in future down rounds. Aim for a "broad-based weighted average" clause to minimize dilution risks.

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I am planning to create a large esops pool for my startup of around 20% and give my co-founder (tech) around 35% equity over a three-year vesting period. In this case, if I raised capital at 10% dilution in a pre-seed or seed round, I may end up with

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