When you get a term sheet from a VC, it’s usually a pretty happy moment after a lot of work. However, there’s often a few things in the first version of a VC’s term sheet that you might want to change. Here’s how you negotiate those terms.
1. Get more Term Sheets
The easiest way to push an investor for better terms is to have other investors also competing to be the round lead. If you have more than one credible term sheet, you can push both parties to better terms by highlighting the strengths of each competing offer.
2. Use the Templates
The term sheet templates from Y-Combinator and the NVCA are standard, you can use their brands to push an investor to terms similar to those templates. Thus removing anything potentially unusual.
3. Insider Investment
Given the term sheet, many of your existing investors will be keen to invest more, immediately. Collect that money, so you can extend your runway and as you no longer *need* a lead investor, you have leverage.
Best of luck out there.
Sterling Road invests in idea stage and pre-seed B2B startups based in the US, Canada and UK.
