The Economics of Term Sheets

a16z Managing Parter Scott Kupor’s new book, Secrets from Sand Hill Road, is a guide to engaging with and understanding VC that covers everything from terminology and term sheets to the fundraising process, governance, and more. In this video from a16z, "The Economics of Term Sheets,” Kupor demystifies the term sheet, giving a brief tutorial for current and potential founders on how to understand the economic terms commonly used. Kupor walks us through the core definitions and concepts, elucidating what they mean as well as how to think about implications and consequences for your company of different clauses down the road.
To learn more about the book, go to: www.secretsofsandhillroad.com
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[@robertcramer5830]

Great video, Scott. I do think you should make clear that the option pool is dilutive to the founder and not to the venture capitalist. Or another way of putting it, the option pool is included in the pre-money valuation. I look forward to reading your book.

[@purelogic4533]

Not quite pre-money valuation. It includes the enlarged capital base but keeps the venture capitalist share ownership non-dilutive but causes the founder to be diluted as option pool shares are provided and kept aside for employees.

[@muhdameen5561]

this was really what I needed, really detailed but brief. thank you!

[@MrVargasesteban]

Really well explained. Thanks!

[@nbme-answers]

a16z playing catch up with ycombinator startup school? i like it!

[@ivwaldron]

$6m * 33% = $1.8m

[@dng992]

2m?

[@felixjosemon]

Thanks. Nicely explained

[@MsLegaC]

Sooooo good! Thank you!

[@georgekariuki8614]

GREAT CONTENT GUYS👍

[@janpoguntke746]

Great video!

[@juanok2775]

Thanks!

[@kefamutuma7402]

Thank you for this video. Esp on Participating and Non-participating.. This can screw most first time entrepreneurs without their knowledge..

[@amitgoswami5047]

Not unless you decide not to hire a lawyer

[@alvaromd3203]

Fantastic!

[@mavricsalvaje]

Most founders are shocked when they assume what their valuation really means. Good job explaining what a round looks like from the VC's viewpoint.

[@kudiwanatalieshonhiwa3520]

Love this thnks

[@gripitsleekllc5373]

I would love to have you on my board of directors🎮 Sleekz are coming😁

[@MrWackspurt]

Hey Scott,
As investors, how do you guys justify the graphs? Essentially, you guys are buying options ( with liquidity preferences and the participating/non participating stuff). I understand you guys do it to hedge your own fund.
However, if you're getting the benefits of buying an option contract, shouldn't you be paying an option premium on it to the option seller i.e. the entrepreneur. How else do you justify the entrepreneur taking additional liquidity preference risk ?

[@jd5787]

How do you compare 2 TS? Learn about what a waterfall is and understand the various scenarios at either the next fundraise or liquidity event

[@timcoh2089]

liquidation preference multiple == zero interest debt - short-term ; participation == equity ownership - long term;

[@nbme-answers]

Appreciate the material but not a big fan of the video cutaways to PowerPoint slides -- Scott is about to point to something he's talking about then an abrupt cutaway to slide. No need to present on a slide what he's very nicely explaining with his words, gestures, & whiteboard. Thanks! [Edit: The visuals/slides in the latter half of the video complemented the content and were unobtrusive. Thanks again!]

[@regoberto-chooselapinid1605]

aw

[@kyleaider9867]

Post money should be more

[@epischerrudolf1629]

#?