How to analyze investment terms?
What is a term sheet?
Termsheet is basically a non-binding, time-bound expression of interest from investors. It usually conveys the most important aspects of the deal including:
- liquidation preferences
- vesting period and more
Investopedia has a very good description of this area:
The best term sheet is one that aligns with the long-term interests of investors and founders. Read this in-depth piece on Termsheet anatomy:
How to negotiate terms?
If you've read the above article you'd know the importance of various aspects of the term sheet. So if you're not happy with any parts of the deal, you must push back and negotiate better terms. Here is some good information on this topic:
What is a Shareholder Agreement (SHA)?