Red Flags

What the greatest technology investors say about Red Flags

Be Wary of Term Sheet Tactics

Jeffrey Bussgang venture capitalist and General Partner Flybridge Capital Partners and former entrepreneur 

“The term sheet is essentially a preliminary, nonbinding document between the entrepreneur and the VC [summarizing key financing terms].  Some VCs issue a term sheet early [] to lock up the deal – and keep the entrepreneur from going elsewhere []. Entrepreneurs need to be wary of these situations and not be afraid to push the VC to define more clearly whether the term sheet  represents a real commitment or merely a discussion document. [] Most VCs issue a term sheet [] only when they have made a final decision []. [] [Be wary of] the “exploding term sheet” [expiring within 24 hours, which is a red flag].  [] Neither side should pressure the other [].” Jeffrey Bussgang, Mastering the VC Game –A VC Insider Reveals How to get from Start-up to IPO on your terms (book), copyright 2010, pg 127-128