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What is Know Your Term Sheet?
Know Your Term Sheet is designed to empower startup founders during the crucial stage of reviewing a venture capital term sheet. It offers a comprehensive AI prompt that, when used with a Large Language Model (LLM), assists in demystifying the complex legal clauses typically found in term sheets.
By providing this prompt and guiding founders to analyze their document using LLM, it levels the playing field. The prompt includes a comprehensive list of points to ask and get better understanding about the term sheet. It helps founders to identify areas where they have to negotiate better terms.
Features
- Liquidation Preference Analysis: Determine if the preference is participating or non-participating, and identify the multiple.
- Vesting Schedule Check: Understand the founder's stock vesting schedule, including cliff, and frequency (monthly, quarterly, or yearly).
- Anti-Dilution Clause Identification: Identify if it's full-ratchet, weighted average, or another type, with detailed explanations.
- Board Representation Clause: Determine if there's a clause for a board member or observer, and how many.
- Protective Provisions Explanation: Detailed breakdown of protective provisions.
- Drag-Along Clause Identification: Check for the presence of a drag-along clause.
- Conversion Clause Identification: Identifies clauses for preferred shares converting to common shares.
- Redemption Clause Identification: Check for the presence of a redemption clause.
Use Cases
- Startup founders receiving a term sheet from a venture capitalist.
- Entrepreneurs seeking to understand the implications of term sheet clauses.
- Founders preparing for negotiations with investors.
- Individuals seeking to learn more about venture capital term sheets.
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