Term sheet red-flag checklist
The terms worth stopping on, as a list to run before you sign anything.
Checklist
SAFEs and terms · Copyable template
Plain-English term sheet glossary card
The terms you will be asked to agree to, each in one sentence of plain English.
A term sheet compresses a large set of future decisions into a few pages, and the headline valuation does not reveal every economic or control consequence of them. It is a map of the deal and of the questions still open, not a substitute for the definitive documents.
It is also a communication test. If you, your cofounder, your board, and your counsel understand the same phrase differently, that ambiguity gets more expensive later, not cheaper.
This card is where you write the plain-language meaning of each material term in your own words, next to the question that would actually change your decision. Six categories, and the same five lines for every clause.
Copyable template
What is in it
- Economic terms
- Downside and exit terms
- Governance and investor rights
- Founder and company obligations
- What is binding now
- The path to closing
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The template is ready. Add your email to open it, and you will also get The Raise Memo — a note for founders raising capital.
How to use it
Notes
Do not copy a term sheet from another company, do not assume a clause is standard because it appears often, and do not treat a verbal explanation as controlling. Take the filled-in card to counsel and ask them to confirm the definitions, the binding provisions, the closing conditions, and the practical effect on your next financing. If the structure creates dilution or control you cannot accept, negotiating, raising less, taking another path, or waiting all remain open.
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The thinking behind it
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From the publication
Read The Raise Memo
A note for founders raising capital—what investors notice, how conviction gets built, and what to do next.
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