When an angel or VC wants to make an investment, they issue a term sheet. This is a short document—one to four pages or so—that sets forth the amount to be invested and the valuation. There is also an array of protections that are heavily legalistic and technical. Often these are the most critical part of the document, yet investors tend to focus instead on the valuation. It can be a huge mistake.
KeywordsCash Flow Common Stock Prefer Stock Walk Away Lower Valuation
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