from Hacker News

Decoding the term sheet

by iterable on 2/24/14, 12:45 AM with 11 comments

• by chkpt on 2/24/14, 8:23 AM

  “Major investors will have the right to participate on a pro rata basis in subsequent issuances of equity securities

  Explanation:

  Allows current investors to retain their current ownership percentage in future financing rounds.”

  Is this right? My understanding was that pro-rata = if an investor owns (say) 20% of a company, then they get to participate with up to 20% of the total of any subsequent financing. This may or may not maintain them at their original 20%.

• by JacksonGariety on 2/24/14, 2:32 AM

  Not sure if quoting The Social Network and showing screens from it helps your credibility.

• by thejteam on 2/24/14, 2:34 AM

  The other day I was at a presentation on pitching investors and the presenter, a veteran entrepreneur and investor, recommended having your own set of term sheets ahead of time to present to investors. Is this a good idea? At least for pre-VC investment, which was what this presentation was primarily about.

• by iterable on 2/24/14, 1:36 AM

  Hey - made this post to explain the term sheet. Would love any feedback.

• by bjoernlasseh on 2/24/14, 3:25 AM

  thx Michael