Term Sheet from Hell

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.

Nagaye Naraka in Burmese art, depicting the tortures of hell.

Nagaye Naraka in Burmese art, depicting the tortures of hell.

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]

About James Chan

James Chan is an entrepreneur, investor, geek, photographer and husband/father based out of Singapore. Apart from frequent travels to Vietnam, Myanmar and Indonesia for work, James can also be found online via his trusty 15" Retina MacBook Pro or iPhone 6+.