My startup is in the process of raising seed funding 100k+. When I receive the term sheet, is there any document that I can review to avoid making mistakes? What are some of the safety measures I should take?
There are several sets of ‘standard’ documents which you can consider using or at least reviewing and using as a comparison to a term sheet you get. 1) Y Combinator Series AA: http://ycombinator.com/seriesaa….
Yokum Taku does a great job at comparing them and explaining pros and cons of using these vs. using a lawyer: http://www.startupcompanylawyer…. The cool thing about these 3 sources is that they are a set of documents, i.e. they can take you from term sheet and all the way through to closing the investment round. For a bit more complex and later stage docs you can see:
There was quite a debate back in Q2 2009 around this topic and you’ll be able to find lots of views from then. Reading these articles helps get a really good understanding of the contents of the docs and you can then form your own view on how you take your funding documentation process forward.