• Title:
• Author: Michael Arrington
• Source link: https://techcrunch.com/2009/08/23/the-funded-publishes-ideal-first-round-term-sheet/
• TL;DR: A good term sheet should not have participation with preferred stock, have a 1X liquidation preference, and single trigger vesting acceleration on acquisition.
• How helpful?: 4/5 ****
• Topic Tags: term sheet, typical structure, basic
• Relevant questions addressed:
• What are some basic terms that I should look for in a term sheet?
• Summary bullet points
• Adeo Ressi (founder of The Funded) released a basic term sheet for use by investors and founders.
  • Protect founders and reduce legal fees
• Key Terms
  • Elimination of participation with preferred stock
    • When there is participation, VCs get their liquidation multiplier back AND are able to participate pro-rata in a sale
  • 1x liquidation preference
  • Single trigger vesting acceleration on acquisition
    • VCs like double trigger because it’s easier to sell a company whose founders are locked in
• Having a standardized sheet like this means huge legal cost savings
• Follow up links