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This book is a methodical, comprehensive review of the contents of a typical venture capital or angel investor term sheet for a priced round. Despite the reference to valuation in the title, there is relatively little discussion of how investors and current shareholders determine a fair price. Instead, the discussion of valuation is primarily technical, focusing on the concepts of pre-money and post-money valuation, dilution, and so forth.
A particularly helpful feature of the book is that Alex Wilmerding provides "Investor Favorable", "Middle of the Road", and "Company Favorable" versions of many term-sheet elements; those examples gave me a concrete sense of what kind of terms one can expect in different situations. The book is also useful in that it serves as a reminder that in start-up investing the golden rule applies, in the sense that "He who has the gold makes the rules." Even the "Company Favorable" terms provide investors with a high level of control and various financial advantages in the event of liquidation.
While far from scintillating, I found this book to be an useful and efficient summary of typical terms and the mechanics of deal-making. A complete walk-through of the various terms, including some details around more obscure provisions like information rights, was helpful to me, both as a new angel investor and as a prospective start-up founder. It is unfortunate than there is no coverage of convertible debt term sheets, given how common convertible debt is in current start-up financing, but, never-the-less, I would recommend the book to anyone who expects to be negotiating (or reviewing) the details start-up term sheets.
A particularly helpful feature of the book is that Alex Wilmerding provides "Investor Favorable", "Middle of the Road", and "Company Favorable" versions of many term-sheet elements; those examples gave me a concrete sense of what kind of terms one can expect in different situations. The book is also useful in that it serves as a reminder that in start-up investing the golden rule applies, in the sense that "He who has the gold makes the rules." Even the "Company Favorable" terms provide investors with a high level of control and various financial advantages in the event of liquidation.
While far from scintillating, I found this book to be an useful and efficient summary of typical terms and the mechanics of deal-making. A complete walk-through of the various terms, including some details around more obscure provisions like information rights, was helpful to me, both as a new angel investor and as a prospective start-up founder. It is unfortunate than there is no coverage of convertible debt term sheets, given how common convertible debt is in current start-up financing, but, never-the-less, I would recommend the book to anyone who expects to be negotiating (or reviewing) the details start-up term sheets.
