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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
| Clause | Rating | Priority to Negotiate |
|--------|--------|----------------------|
| ... | ... | ... |
References
- references/market-standards.md: Current market standards by stage (2024-2025 data)
- references/clause-analysis.md: Detailed analysis guidance for each clause type
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