Closing the deal: term sheets
Keep it simple and transparent. Know your walk-away. Be fair and reasonable.
Most early rounds are simple. Your job is to keep them that way and spot the terms that aren't.
Questions answered
- SAFE vs priced round: which should you use for a seed round?
YC's seed guide on SAFEs vs priced equity: why most seed rounds use SAFEs, what you negotiate, and why priced rounds cost more time and money.
The 80/20
- At pre-seed, keep it simple: use a SAFE.
- Prepare your data room early, before a term sheet lands.
- Know what investors check: team, tech, market, traction, cap table, legal documents and IP.
- Messy ownership or undisclosed liabilities kill deals.
- Watch for complicated economic terms. Good investors keep the structure simple.
Resources
- SAFE documents and user guide · Y Combinator
YC's standard SAFE, the default for most pre-seed and seed rounds.
- A standard and clean Series A term sheet · Y Combinator
What a fair Series A term sheet looks like, with a template.
- High resolution fundraising · Paul Graham
Why raising on SAFEs one investor at a time changed how seed rounds work.
- Startup term sheets explained · Carta
A lawyer walks through each term sheet clause.
- Understanding SAFEs and priced equity rounds · Y Combinator
When to use a SAFE and when to price the round.
- Demystifying the term sheet · Mountside Ventures
A visual walkthrough of the key terms.
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