Angel Term Sheet Evolution Part 3

BY Basil Peters

Angel Term Sheet Evolution – Part 3 – Questions and Answers from the Bellingham Angel Members

Bellingham Angel Group Education Breakfast November 17, 2009 – Basil Peters and Dan Rosen

Highlights of Angel Term Sheet Evolution- Part 3:

  • Should term sheets be binding?
  • Regional differences in director compensation
  • Building alignment on the exit
  • Stand stills and exclusivity – do we need them?
  • Is being on a board ever worth our time?
  • Redemption rights and exits
  • Vesting – best ways to implement? Tax considerations.
  • Angels have been spoiling companies by undercharging
  • Terms that create ‘exit push’ and ‘exit pull’
  • Protective provisions drive directors crazy
  • Why VCs don’t care about director compensation
  • How the lawyers have reacted to this term sheet
  • Balancing good governance and protective provisions
  • Lead investors should help entrepreneur budget for the board
  • Negotiating terms with entrepreneurs early in the process
  • Board compensation going up faster than other compensation
  • Why all directors should make a meaningful investment
  • Angels and VCs – Seattle and Silicon Valley
  • Board comp approx equal to CEO total comp – mix may differ
  • Subject matter experts rarely make the best directors
  • The importance of valuation

Part 4 of this video includes the rest of the questions and answers.

Part 4 of this video is the rest of the Q and A.