Learn about the most important negotiation points in VC Term sheets and other insights from the team of Silicon Valley experts. Louis Lehot is the founder of L2 Counsel, P.C. He also specializes in assisting innovative venture capital, growth equity, and private equity investors in deals of all sizes, from early-stage angel or seed round financing to IPO and beyond. Feel free to connect with Louis: Facebook: https://www.facebook.com/l2counsel/ LinkedIn: https://www.linkedin.com/in/louislehot/ Twitter: https://twitter.com/lehotlouis Instagram: https://www.instagram.com/lehotlouis/

1. VENTURE CAPITAL
TERM SHEETS 101
August 4th, 2020

2. 1
© 2020 Louis Lehot and L2 Counsel, P.C.
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1.We are not your attorneys.
2.This is not legal advice.
3.Past results achieved are not a guarantee of
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3. PANELISTS
Louis Lehot
Founder
Nicole Hatcher
Founding Partner
Vitaly Golomb
Managing Partner
2

4. AGENDA
1. VC Deal Activity in Q2
2. Stages of VC Financing
3. Financing Instruments
4. Convertible Note/SAFE
5. Equity Round Term Sheets
6. Later Stage Terms
7. Side Letters
8. Collaboration Agreements
3

5. 1. VC DEAL
ACTIVITY IN Q2*
Insights based on PWC’s MoneyTree™ Report – Q2 2020 4

6. 1. VC DEAL
ACTIVITY IN Q2*
Insights based on PWC’s MoneyTree™ Report – Q2 2020 5

7. 1. VC DEAL
ACTIVITY IN Q2*
Insights based on PWC’s MoneyTree™ Report – Q2 2020 6

8. 1. VC DEAL
ACTIVITY IN Q2*
Insights based on PWC’s MoneyTree™ Report – Q2 2020 7

9. 1. VC DEAL
ACTIVITY IN Q2*
Insights based on PWC’s MoneyTree™ Report – Q2 2020 8

10. 1. VC DEAL
ACTIVITY IN Q2*
Insights based on PWC’s MoneyTree™ Report – Q2 2020
1. VC DEAL
ACTIVITY IN Q2*
Insights based on PWC’s MoneyTree™ Report – Q2 2020 9

11. 2. STAGES OF
VC FINANCING
• Seed Stage
• Early Stage
• Growth Stage
• Pre-IPO Stage
10

12. 3. FINANCING
INSTRUMENTS
• Convertible Note
• SAFE
• Equity Financing
11

13. 4. CONVERTIBLE
NOTE/SAFE
Convertible Note:
• Maturity Date
• Interest Rate
• Conversion Discount
• Valuation Cap
12

14. 4. CONVERTIBLE
NOTE/SAFE
SAFE:
• Conversion Event
• Conversion Price
• Valuation Cap
• Termination
13

15. 5. EQUITY ROUND
TERM SHEETS
Economics:
• Pre Money
• Post Money
• Investment Amount
• Subsequent
Closings
• Option Pool
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16. 5. EQUITY ROUND
TERM SHEETS
Governance:
• Board Structure
• Voting Rights
• Information Rights
15

17. 5. EQUITY ROUND
TERM SHEETS
Protections:
• Liquidation Preferences
• Participation
• Antidilution
• Pay to Play
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18. 5. EQUITY ROUND
TERM SHEETS
Protections:
• Warrants
• Co-sale and ROFR
• Drag Along
• Tag Along
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19. 5. EQUITY ROUND
TERM SHEETS
Other:
• Dividends
• Cost of Counsel
18

20. 6. LATER STAGE
TERMS
• Ratchets
• Liquidation
preferences
• Carve-outs
19

21. 7. SIDE LETTERS
• Most favored nations Rights
• Transfer Rights
• Enhanced Reporting and
Information Rights
• Pro Rata
20

22. 8. COLLABORATION
AGREEMENTS
• Non-compete
• Rights of First Refusal
• Rights of First Offer
21

23. Q&A
For More Information:
Nicole Hatcher
Founding Partner
allenhatcher.com
nicole@allenhatcher.com
Vitaly Golomb
Managing Partner
gscap.co
v.golomb@gscap.co
Louis Lehot
Founder
l2counsel.com
louis.lehot@l2counsel.com
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