Paul Klay VC Skills

---
name: vc-terms-review
description: Review venture financing documents and offers from the founder's side — term sheets, SAFEs, convertible notes, charters, stock purchase, investor rights, voting, co-sale, and shareholder agreements — and judge how good the terms are against model documents and current market data. Flags off-market and dangerous terms, models exit payouts and dilution, and prepares negotiation asks and questions for counsel. Use whenever a founder shares, pastes, or describes terms or documents from a VC or angel and asks whether they are fair, standard, or safe to sign, even if they only ask about one clause; not for drafting financing documents from scratch or for finding investors.
---

# VC Terms Review

Help a founder understand what they are about to sign: who gets paid in an exit, who controls the company, what investors can see and do, and which rights can change later without the founder's consent. Judge the terms against three things: the model documents the market treats as the baseline, current deal data for the same stage and geography, and the combined effect of all the terms together.

Founders often negotiate valuation for weeks and skim the rest. The expensive surprises usually sit in liquidation preferences, control provisions, amendment mechanics, and information rights. Spend the review's attention there.

The review prepares the founder for their lawyer and for negotiation; it is not legal advice. Do not contact investors, send documents anywhere, or present a conclusion as a legal opinion.

## 1. Establish the deal context

Read every document provided before judging any single clause; terms in one document often change the meaning of another (a term sheet promising "standard NVCA documents", an investor rights agreement whose waivers are governed by a voting threshold defined in the charter). Identify each document's type and version, and whether it is a non-binding term sheet or a definitive agreement.

Collect what changes the conclusions. Use what the founder has already said; ask for missing items in one short batch:

- Stage, round size, pre- or post-money valuation, lead investor, and other participants
- Governing law and company jurisdiction (US Delaware, UK, EU, other)
- Fully diluted cap table, including option pool, outstanding SAFEs and notes, and earlier preferred series with their preferences
- Current board composition and who appointed each seat
- Competing offers, runway, and what the founder cares about most (valuation, control, speed, a specific investor)

When the documents are in hand, deliver the review with clearly labeled assumptions and put the open questions at the end; stop to ask first only when a missing fact would change the verdict and cannot be covered with scenarios. State which conclusions depend on each assumption. If only a term sheet is available, review it and list what to verify when the definitive documents arrive. Ask for side letters, the management rights letter, and any document the term sheet refers to; important rights often sit there.

## 2. Extract the terms

Build an inventory of every material term with its document, section, and the exact language. Quote rather than paraphrase anything that drives a conclusion. Read the definitions: Requisite or Majority Holders, Major Investor, Competitor, Deemed Liquidation Event, Exempted Securities, Company Capitalization, and Fully Diluted shares decide how the operative clauses work.

Distinguish "not addressed in this document" from "not part of the deal". A missing term in a term sheet may arrive later through model-form defaults; a missing protection in a definitive agreement is simply absent.

Read [references/document-map.md](references/document-map.md) for where each term lives in each document type and the checks specific to NVCA documents, SAFEs, convertible notes, and UK or European documents.

## 3. Benchmark each term

Rate each term on one scale:

| Rating | Meaning |
|---|---|
| Founder-friendly | Better for the founder than the model form or market practice |
| Standard | Matches the model-document default and common practice for this stage and geography |
| Investor-leaning, common | Negotiable but frequently accepted; accept only if the trade is worth it |
| Off-market | Uncommon in current data for this stage; push back |