This Week in Startups Negotiating a Term Sheet: Deal killers, what terms are worth fighting for & more with Becki DeGraw | Wilson Sonsini Startup Legal Basics
Nov 24, 2020
Becki DeGraw, a partner at Wilson Sonsini, brings her expertise in startup legal matters to the discussion. She highlights the critical nature of term sheets in securing investments, discussing deal killers that can disrupt negotiations. Becki emphasizes understanding pre-money valuations and the use of cap table software to maintain clarity in ownership during funding talks. The podcast also covers the vital role of legal guidance in governance and building an effective board, stressing how these factors shape the future of startups.
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Term Sheet Importance
- Use term sheets to establish investment terms and ensure agreement before involving lawyers.
- This saves money and ensures a smoother process for both founders and investors.
Term Sheet Commitment
- Creating a term sheet represents a high level of commitment from an investor.
- There are legal, reputational, and time costs involved.
Failed Due Diligence
- Jason Calacanis shares an example of uncovering fraudulent claims during due diligence.
- A company falsely claimed Google and Facebook as customers, leading to deal termination.