It is typical that the term sheet results in ~5 different contracts: the Stock Purchase Agreement (through which the company actually sells stock), the Investor Rights Agreement, the Voting Agreement, the First Refusal and Co-Sale Agreement, and changes to the company's Certificate of Incorporation.
There are also sometimes opinions of counsel and other "ancillary" documents which are just as important but not typically negotiated as they're very standard.
It is mind-bogglingly routine that a company pays $30k to "expand" from the term sheet to definitive contracts, and then the VC firm spends an additional $15-30k++ (reimbursed by the company) to review that expansion to make sure the other firm did it right.
I'm no fan of long term sheets, but IMO, this term sheet doesn't just punt that term to definitives; it gives me the expectation that all investors will receive "major investor" rights without dollar or ownership thresholds. Specifically, I feel that way because the "major investor" rights (ROFR, co-sale, pro-rata, info) are are in-line with anti-dilution and registration rights, which are typically afforded (in varying degrees) to smaller investors. Were I an existing investor or angel, the definitives adding a threshold would feel like a retrade of the term sheet.
Especially if the intent is to help unfamiliar founders & angels understand what's a "clean" or fair deal, I'd put in a vote that a v2 of this term sheet would clarify the applicability of rights to smaller investors, maybe with some "batteries included" guidance on that point.
Question: how did you think about giving pro-rata & information rights in this term sheet? It looks to me that the Other Rights & Matters section grants it to _all_ investors. Is that typical in your experience?
It is typical that the term sheet results in ~5 different contracts: the Stock Purchase Agreement (through which the company actually sells stock), the Investor Rights Agreement, the Voting Agreement, the First Refusal and Co-Sale Agreement, and changes to the company's Certificate of Incorporation.
There are also sometimes opinions of counsel and other "ancillary" documents which are just as important but not typically negotiated as they're very standard.
It is mind-bogglingly routine that a company pays $30k to "expand" from the term sheet to definitive contracts, and then the VC firm spends an additional $15-30k++ (reimbursed by the company) to review that expansion to make sure the other firm did it right.