Financial Planning
How to Compare Venture Capital Term Sheets With Your Attorney
Compare funding proposals by economics, control, conditions and unresolved questions using a document-linked attorney review brief.
What you will learn
- Build a comparable proposal register
- Identify missing economic and legal inputs
- Prepare a traceable issue list for qualified advisers
Prepare a term-sheet comparison by transcribing the proposals into the same categories, modeling their economic assumptions, and listing questions for your attorney. Do not choose solely by valuation or treat a comparison worksheet as legal interpretation.
This guide organizes US startup financing review. It does not tell you which provisions to accept or whether any term is enforceable. Use the actual documents and qualified counsel. Do not generate substitute legal agreements from the worksheet.
Preserve the proposal and its context
Save each version with date, sender, status, financing amount, instrument, proposed timing and referenced documents. Keep exact wording or a clear locator in the internal comparison so a summary can be checked.
The NVCA model-document collection includes interconnected financing documents and explanatory commentary. A model form is a reference for counsel, not proof that a particular proposal is complete or suitable.
Compare economics and process on separate lines
Attorney-review categories
| Category | Inputs and questions |
|---|---|
| Cash and pricing | Investment, primary/secondary split, pre/post basis, fees and net company proceeds. |
| Ownership | Conversion assumptions, pool size and timing, pro forma denominator. |
| Proceeds | Preferences, participation, ranking, dividends and related scenarios. |
| Governance | Board, votes, consents, information and other rights counsel identifies. |
| Conditions | Diligence, approvals, milestones, tranches and funding contingencies. |
| Process | Dates, expenses, confidentiality, exclusivity and other obligations counsel confirms. |
Mark “not stated” separately from “none.” Ask counsel which portions may have binding consequences rather than assuming an entire term sheet is nonbinding.
Work an illustrative comparison without selecting a winner
Fictional teaching proposals: A offers $2 million at $8 million pre-money, with a new 10% post-round pool included before pricing. B offers $2 million at $9 million pre-money, but its pool basis and expense reimbursement are not specified. Both remain unreviewed.
Completed first-pass comparison
| Issue | A | B | Next action |
|---|---|---|---|
| Headline post-money, simple only | $10 million | $11 million | Do not equate headline value with full ownership economics. |
| Pool definition | 10% available post-round, pre-money pricing | Not specified | Ask counsel to clarify B and model both on the same basis. |
| Fees and net cash | Amount still to verify | Reimbursement unspecified | Request scope and model net cash. |
| Preference and control | Needs document review | Needs document review | No overall recommendation yet. |
B has a larger stated valuation, but the comparison is incomplete. A responsible output is a focused issue list, not a green “best offer” badge. For the simplified A pool arithmetic, see the option-pool lesson; it does not resolve the other terms.
Turn unknowns into an adviser brief
- Transcribe facts with document references.
- Flag ambiguous wording and missing inputs without guessing.
- Ask the finance owner to model ownership and cash under counsel-confirmed assumptions.
- Ask counsel to identify legal effects, dependencies, deadlines and negotiation questions.
- Record the response and update the comparison without overwriting prior versions.
- Summarize decision trade-offs for authorized leadership, keeping legal advice private.
Proposal / version / received date: [ ]
Investment / pricing / net-cash assumptions: [ ]
Convertibles and pool treatment: [ ]
Preference / participation / governance issues: [ ]
Funding conditions / milestones / dates: [ ]
Fees / process obligations requiring review: [ ]
Exact clause or document locator: [ ]
Question / attorney or finance owner: [ ]
Response / date / resulting model change: [ ]
Open dependency / decision-maker / deadline: [ ]Check the handoff
A common failure is summarizing “standard terms” without showing the source. Another is modeling maximum committed cash as immediately funded despite tranches or conditions. Avoid circulating private legal advice or another investor’s confidential proposal without permission.
- Every summary can be traced to the current document.
- Unknowns remain visible.
- Cash, ownership, proceeds and control are separate.
- Comparisons use consistent assumptions.
- Counsel confirms obligations and deadlines before action.
Prepare the supporting ownership bridge and proceeds questions alongside the brief. Finta can help organize context and follow-up; it is not your law firm.
Informational disclaimer
We are not lawyers. This article is for general education only and is not legal, tax, accounting or investment advice. Check with your attorney or accountant before acting on it.