Presented in Term Sheet Demystified workshop at Startup Thailand 2018 conference on May 19, 2018 Download "A Model and Guide to Term Sheet: Thailand Venture Deals" at http://tvca.or.th

1. Term Sheet Demystified:
Thailand Venture Deals
May 19, 2018
TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018

2. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
About
Vitavin Ittipanuvat
Senior Investment Manager
Beacon Venture Capital
Pongwut Ittipoonsawat
Senior Associate
InVent
Some facts about us:
• software engineers by training, know the beauty of software and why it’s eating the world
• 1st-gen VC, learned & grew with Thailand’s pioneer venture fund since 2014
• 10+ investments, mostly as the lead investor, including companies in TH, SG & US

3. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Startup Game: Two Sides of the Table
Founder
Investor
Build
VENTURING
Identify
FINANCING
Find
Fund
Lead
RAPID
VALUE CREATION
Support
+ =
Return: to self & VCs
Return: to self & LPs

4. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Fundraising Journey: Two Sides of the Table
TERM SHEET CLOSINGSCREENING
Founder
Investor

5. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Fundraising Journey: Two Sides of the Table
TERM SHEET CLOSINGSCREENING
Founder
Investor
• Provide answers
• Provide data
• Run company
• Ask questions
• Request data
• Do diligence
• Offer/Structure deal
• Negotiate terms
• Negotiate terms
• Run company
• Provide more answers
• Provide more data
• Fulfill C.P.
• Run company
• Ask more questions
• Request more data
• Structure/Close deal
BUSINESS
DUE DILIGENCE
FINAL
DUE DILIGENCE

6. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Fundraising Journey: Two Sides of the Table
TERM SHEET CLOSINGSCREENING
Founder
Investor
• Provide answers
• Provide data
• Run company
• Ask questions
• Request data
• Do diligence
• Offer/Structure deal
• Negotiate terms
• Negotiate terms
• Run company
• Provide more answers
• Provide more data
• Fulfill C.P.
• Run company
• Ask more questions
• Request more data
• Structure/Close deal
BUSINESS
DUE DILIGENCE
FINAL
DUE DILIGENCE

7. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Fundraising Journey: Two Sides of the Table
TERM SHEET CLOSINGSCREENING
Founder
Investor
• Provide answers
• Provide data
• Run company
• Ask questions
• Request data
• Do diligence
• Offer/Structure deal
• Negotiate terms
• Negotiate terms
• Run company
• Provide more answers
• Provide more data
• Fulfill C.P.
• Run company
• Ask more questions
• Request more data
• Structure/Close deal
BUSINESS
DUE DILIGENCE
FINAL
DUE DILIGENCE
90%< 5%

8. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Fundraising Journey: Two Sides of the Table
TERM SHEET
CLOSINGSCREENING
Founder
Investor
EXIT
(OR WIND UP)

9. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Fundraising Journey: Two Sides of the Table
TERM SHEET
CLOSINGSCREENING
Founder
Investor
EXIT
months years
THE ROLLER COASTER
(WIND UP)
(WIND UP)
(WIND UP)
(WIND UP)

10. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Fundraising Journey: Two Sides of the Table
TERM SHEET
CLOSINGSCREENING
Founder
Investor
EXIT
What you experience here
will mostly define there
months years
THE ROLLER COASTER
(WIND UP)
(WIND UP)
(WIND UP)
(WIND UP)

11. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Term Sheet: Purpose & Nature
• The term sheet’s objective is to outline the key terms of an investment for mutual
understanding between the founders and the investors.
> Definitive agreements (e.g., shareholders agreement and share subscription agreement) that
define the actual terms will be negotiated and executed later based on the term sheet.
• Despite most term sheets look like a contract to invest in every way, they are not a legal
promise to invest.
> Generally only the confidentiality and no-shop provisions are the binding clauses once the
signatures are completed.
• Level of details can vary a lot depending on the investor
> However, avoid too broad or incomplete term sheets issued early just to lock-up the deal.

12. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Term Sheet: Key Elements
ECONOMIC CONTROL
• Valuation
• Investment Amount
• Pre-emptive Right
• Right of First Refusal
• Anti-dilution
• Tag-Along
• Liquidation Preference
• Board of Directors
• Lock-up Period/Vesting
• Reserved Matters
• Information Rights
• Drag-Along

13. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Term Sheet: Walkthrough

14. TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
The Term Sheet: Common Vocab
EXPLODING
TERM SHEET
PULLING
THE
TERM SHEET
$X ON $Y

15. Questions?
1) Do founders need a lawyer?
2) Is a separate NDA needed?
3) How much detailed should the term sheet be?
4) Should VC pay for the legal expenses?
5) Can founders change their mind after the term sheet is signed?
6) What are the remaining risks after the term sheet is signed?
7) ………………………………………………………………………………
TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018

16. Take-Away Tips
• Valuation is not everything – avoid a zero-sum game
• Follow the etiquette – reputation follows a person for a life time
• Be considerate & honest – VC relationship is long, make it an enjoyable one
TERM SHEET DEMYSTIFIED @STARTUP THAILAND 2018 MAY 19, 2018
TVCA.OR.TH
THAILANDTECHSTARTUP.ORG