Understanding Venture Capital Term Sheets
Understanding Venture Capital Term Sheets
Harvard Business School Rock Center March 4, 2014
Paul Sweeney Partner at Foley Hoag LLP
(617) 832-1296 psweeney@
? 200184 Foley Hoag LLP. All Rights Reserved.
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These materials have been prepared solely for educational purposes. The presentation of these materials does not constitute legal advice, nor does it establish any form of attorney-client relationship with the author, presenter or Foley Hoag LLP. Specific legal issues should be addressed through consultation with your own counsel, not by reliance on this presentation or these materials. Attorney Advertising. Prior results do not guarantee a similar outcome. ? Foley Hoag LLP 2014.
United States Treasury Regulations require us to disclose the following: Any tax advice included in this document and its attachments was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
? 200184 Foley Hoag LLP. All Rights Reserved.
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Introductions
Paul Sweeney, Esq.
Partner (617) 832-1296 psweeney@
Co-Chair of Technology Practice Named one of the "Top 20 Startup Lawyers in
Boston," and one of "Ten Most Innovative Lawyers in America" by the ABA Journal
Have worked on over 100 angel and venture
capital financings (debt and equity) over 16 years of practice.
? 200184 Foley Hoag LLP. All Rights Reserved.
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What is a term sheet?
aka- "Letter of Intent," "Memorandum of
Understanding," "Agreement in Principle"
First major step in transaction, when material terms of
deal are negotiated and agreed to ? Focus on the deal is at its maximum ? Gives road map for lawyers to draft actual docs
More detail generally better (especially for the
company)
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Non Binding (to a point....)
Not a binding agreement to fund
?Subject to actual documents, due diligence, other closing conditions (e.g. legal opinion)
?But practically speaking, very unusual for the actual deal to vary significantly from the term sheet
Some provisions are usually legally binding
?Confidentiality (company can't disclose terms or even existence of term sheet)
?Exclusivity (company can't shop deal - usually 30-60 days)
? 200184 Foley Hoag LLP. All Rights Reserved.
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