The Daily Start-Up: Will VCs Actually Use This Term Sheet?
Last week we mentioned how angel investor and entrepreneur Chris Dixon detailed on his blog the terms he thinks are ideal for first-round financings. Venture capitalist Fred Wison came out in support of the simplified term sheet, writing that the industry needs “to eliminate a lot of bad terms that have caused a lot of harm” and “converge on a set of standard Series A terms that everyone uses.” These posts inspired Adeo Ressi - the founder of The Funded, a site where entrepreneurs rate venture capitalists - to dream up the “Plain Preferred” term-sheet template that “aligns the investor and the entrepreneur incentives.” The Series A term sheet is designed to protect founders and save tens of thousands of dollars in legal fees. Let’s see whether venture capitalists will actually agree to such scaled-down deal terms, and if Fred Wilson and Brad Feld, another VC who supports the idea, will put their money where there mouths are. Earlier this year, Ressi came out with legal documents he believes will protect start-up founders from the “atrocities of investors.” Ressi tells us those founder-friendly incorporation documents are being used by about 50 start-ups….