Oh one other quick word.
When I started dealing with term sheets in both Notes and Preferred Equity, I strove for understanding. I went in thinking that this was an orderly process and that there were standard contracts for this sort of thing.
The one thing I learned is that NOTHING IS STANDARD.
Terms are written purely on whatever the entrepreneur and the investor(s) want. Yes, there are standard things like interest rate payments or anti-dilution provisions, but as for what interest rate to pay or which type of anti-dilution provision of which there are many…all up for grabs.
So if anyone tells you their term sheet is standard in the industry, don’t believe them. Everything is negotiable, so just say, “Thanks I’ll take a look and get back to you.”
Onwards to Part II…