BAVenturePartnersTermSheets101（三）.pptVIP

BA Venture PartnersTerm Sheets 101 November 2006 Term Sheet Expiration Date Term sheets will typically have a very short timeframe within which to respond, usually one week or less Why? What happens if the date is not met? The Monday paradox Amount of the Funding Term sheets may say a specific amount, or say a minimum and maximum number of funds to be raised Why a minimum amount? What if more interest comes from other investors to make the round larger? Is the term sheet ‘fully funded’? Valuation Valuation for the equity round may be expressed as a Pre-Money dollar amount, a Post-Money dollar amount, or a Price Per Share All that matters is Price Per Share Pre- and Post- money valuations can be altered optically through employee options Are there any new options being generated, and are they in the pre-money valuation or post-money valuation? Who will the options dilute? Make sure the assumptions on shares by class are correct This is the most emotional part of a term sheet Know ahead of time what each valuation means to you and your team; have a spreadsheet showing the money to you at every exit valuation and how this round price changes it Closing Date Term sheets usually give an expected date for the closing (or when you get your money) Is this binding? What are the conditions to allow a closing? Will this financing have ‘tranches’? What are the milestones for allowing a tranche financing to be completed? Who decides if the tranche will be invested? Who can say yes or no to participation in a tranche? Dividends This is one of the most confusing terms in a term sheet Dividends are interest on the money provided paid in additional cash at liquidation or sale of the company ‘Non-Cumulative’ dividends mean that the board of directors has to approve of the issuance of dividends and no requirement for prior years exists ‘Cumulative’ dividends mean that the dividends are accrued regardless of board approval and do not need to be approved every year Dividends are not u