I thought I’d seen it all, but I was wrong.
An entrepreneur was referred to me by a friend. He had just received a term sheet from an investor, and wanted a second opinion. My friend figured I knew my term sheets, and introduced him to me. I’m always happy to be helpful, and took a call with the entrepreneur.
I was dismayed, but not surprised by what I saw. It’s just as hard being a young VC as it is to be an entrepreneur trying to fundraise in Southeast Asia.
I advised him to hold off on signing it and suggested that he secure term sheets from other investors. I got permission from the entrepreneur to discuss some of the clauses from the term sheet, and will be writing a series of blog posts about them. I hope to publish something every few days. My objective is to help the uninitiated amongst you to better understand why this is a term sheet from hell, and how it would affect you and your business subsequently.
Stay tuned![dark_box]The first post in this series discusses liquidation preferences and participation.[/dark_box]