Stop Reinventing the Terms of First Round Investing Deals

There is a useful conversation going on at venture capitalists Fred Wilson's and Brad Feld's respective sites about the world of early-stage investing, specifically the time wasted negotiating/customizing terms. Fred talks about the ideal first round term sheet, to which Brad responds with a link to a prior series he has written on early-stage term sheets.

It's all good stuff, so be sure to read it as this sort of commonsense is overdue. The key quote goes to Brad with this:

But we also need leadership from VCs and law firms to realize that there really should only be two terms being negotiated in most first round financings – price and valuation.

Absolutely right. We need leadership from multiple constituencies -- lawyers, VCs, angels, etc. -- to drive home that time and effort spent diddling around with early-stage terms is generally time and effort wasted.

Comments

[Dan Weber]

But we also need leadership from VCs and law firms
Oh man. I can just imagine what VCs would think is "fair" and they would love it to be standard.

I'm slightly encouraged that they are using YCombinator as a starting model, but what matters is what the actual term sheets look like.