Topic map / Money and capital
13 questions
Cooley GO’s term-sheet note, last reviewed in January 2022, treats valuation, the option pool, liquidation preference, the board, protective provisions, and exclusivity as the terms worth understanding before you argue about the rest. This site also asks about SAFEs that may convert in the same round, consent rights, and debt covenants. How those stack is a question for the documents.
1.Which clauses bind you before any money arrives?
Pass 2 · strengthened
Name each provision that binds now. A voluntary handshake convention is not the contract law that applies to you.
2.How long is exclusivity, and what does it forbid?
3.Is the option pool inside the pre-money valuation?
Pass 2 · strengthened
Keep modelling the pool and any conversion. That question was already in the first pass.
4.Which outstanding SAFEs or notes convert in this round, and on what cap or discount?
5.What does the liquidation preference pay at a small exit, not only at the exit in the story?
6.Which consent rights would let an investor block a later raise, a sale, or the budget?
Pass 2 · strengthened
Separate board, class, and investor-specific approvals. They can live in different documents, and an earlier round can still bind.
7.Who is on the board the morning after closing?
8.What may still change when the long documents arrive?
Pass 2 · strengthened
Keep interest, a conditional sheet, signed obligations, cleared cash, and cash you may spend in different rows.
9.Which conditions or tranches mean the cash is not yet yours to spend?
Pass 2 · strengthened
Give every tranche and closing condition an owner and a piece of evidence. A model-document update that mentions tranches is not a finding that tranches are unfair.
10.What is the plan if the investor delays or withdraws during exclusivity?
Pass 2 · strengthened
Silence is a reason to use the fallback. It is not proof of fraud. Read the exclusivity clause and the dates it writes.
11.If any of it is debt, what is the security, the covenant, and is there a personal guarantee?
12.How do you keep a funding-status ledger without calling conditional interest committed capital?
Pass 2 · new
A verbal yes is not money you can spend. Record evidence, conditions, the owner, the deadline, dependencies, and a fallback.
13.Who is responsible for each remaining closing condition, including co-investors who depend on each other?
Pass 2 · new
Closing is a list of owners and evidence. It is not a date that arrives by itself.
Negotiating term sheets: focus on what’s important · Cooley GO, Matthew Bartus
A law firm’s overview of valuation and the option pool, liquidation preferences, the board, protective provisions, and exclusivity. It is a US-oriented practitioner note, not a UAE opinion.
Handshake Deal Protocol · Y Combinator
A handshake is a verbal commitment. The transaction is when documents are signed and money changes hands. An investor can say no in a way that sounds like yes, and can take a free option.
2025 updates to the model legal documents · National Venture Capital Association
A release note, checked 14 October 2026. NVCA said it had updated five model documents, and that the updated documents now include mechanics for tranched financings. The note was read. The model clauses were not. It is not evidence that tranches are new, or that they are unfair. The documents are US venture forms, not UAE law.
Model legal documents · National Venture Capital Association
The catalogue page says each document is a starting point only, should be tailored, and should not be construed as legal advice for any particular facts. The landing page and that disclaimer were read. The model clauses were not audited.