Term sheets: Are they really pre-nuptials?
At last night’s Entrepreneurship 101 lecture, I went through a typical term sheet discussing the various items and their import to an entrepreneur on the receiving end of such a term sheet. Several audience members commented on the requirement that the potential investor has an out if “reasonable” due diligence gives them second thoughts.
How does one define “reasonable” in these circumstances?
My feeling is that this is much like signing a pre-nup, since early stage investing is a little like getting married: if you don’t trust your partner and feel that they are reasonable, the relationship is doomed to divorce!
Question of the Week
Do you have any stories — good or bad — of term sheets that have led to great successes, or not? I know we’d love to hear them!
Downloads and Resources
- Webcast
- Class information
- ENT101 Facebook Group
- Sample term sheet (PDF)
- Presentation: “Term Sheets – Terms of Endearment?” (PDF)
As a Venture Group Advisor at MaRS, Tony advises entrepreneurs and high growth companies, particularly in environmental, advanced materials and manufacturing markets, with a special emphasis on mentoring and development of entrepreneurs.