Funny how "convention", "tradition", "standard terms", and "the way things have always been done" <i>invariably</i> break in VCs' favor. $10k of legal fees is small potatoes but I hate the unbridled arrogance that says taking note of that is somehow being greedy but insisting on its presence is simply being a gentleman.
Good post, its important to know what you want and what is important. When I first started talking to VC partners I discovered that they were like any sort of relationship, and like those relationships if they have something that annoys you now, its only going to get worse. So ask yourself early on if you can deal with that.
Chris is a good guy - we worked together at Delicious.<p>I've said it before: entrepreneurs will signal, often loudly and clearly, why not to invest in them.
All contracts (including Term Sheets for early financing) are simply a manifestation of the parties' expectations. At the end of the day, relationships are more important. How often are these term sheets enforced anyway?
The Golden Rule - if you wouldn't trust the other party on a handshake, all the paper in the world isn't going to be enough to put the deal in writing.
It seems that for many people, getting a VC term sheet is considered a measure of success. Sometimes it seems like that's the goal they are working for.<p>Often, however, when I see one of these articles of advice from a VC, I become glad that our business is so capital efficient that we shouldn't need outside investment until we're very profitable.<p>And even then, I'd seek out a good angel, rather than conventional venture capital. (In my career, I've seen enough bad decisions forced onto founders by venture capitalists first hand.)<p>The one phrase that will never hold sway on me is "that's the way it's always been done." And, frankly, I think it tells you a lot about someone's motivations when they want to put expenses that they control on your balance sheet.
> One founder wanted to negotiate out of having to pay $10K in lawyer fees.<p>Are these fees for the VC's due diligence investigation, or are they for putting together good paperwork for the company? For the former, the company has just bartered legal services and needs to issue an IRS form 1099 to the VC who has to pay taxes, and may be committing securities fraud by colluding to book the fees as basis cost rather than operating expense.<p>Anybody know?
> <i>Another person didn’t want preferred shareholders to have any preferred rights.</i><p>I'm just fine with the idea of VCs getting common stock like everybody else, but I'm not so much in favor of random redefinitions of words. I'd be afraid of the liability to the company when that person started making up his own definitions of things like employment law...