How do you handle term sheet revisions and renegotiations if needed?

Understand dilution and terms is important. However, I suggest founders focus more on WHO is in their round as opposed to the valuation or dilution at the very early stages. The early investors can be super important to your growth and to setup you next round. It wont matter about $5M vs $7M valuation if you never get to the next round! Focus on the who and not the what.

Do not sign a term sheet unless you understand 100% of what's written above the dotted lines. A term sheet can have broad implications for the future of your venture. Some term sheets are relatively straightforward and easy to understand, while others may include complicated provisions and legal language. If necessary, seek legal advice from someone with experience in early-stage startup deals. They can identify any red flags and prevent you from making any major mistakes.

Another thing to consider when raising early-stage venture is to stay away from priced rounds before Series A. About 90% of the founders that i chat with are using SAFE's for their early rounds which have very standard terms that should not need to be changed or modified a ton. Then, it just comes down to valuation cap and discount percentage. Keep things simple in the early rounds. Simple is the best !

When revising term sheets and renegotiating as a new founder, it's important to combine strategy + creativity. My go-to tip is to seek advice from investors and other founders in your network. I've personally used various tactics in negotiations, the most impactful was a role-reversal exercise, where I swapped roles with an investor, which taught me a lot about the investor's view & negotiation tactics. Try mock negotiations with a mentor/advisor as the investor. Remember, negotiation is a team effort, and task #1 is to strengthen your team. Ultimately, you're negotiating with a person, who may have specific goals and constraints. The key to a win-win situation is to focus on your needs while respecting the other party's needs and limits.

I've negotiated hundreds of equity and debt term sheets for earlier-stage companies, and here are my takeaways. 1. There is no substitute for competition. Your deal will be better if you have multiple term sheets, so pursue that path intentionally. 2. Get business advice, not just legal advice. This negotiation will significantly impact your economics, and if this is your first time doing it, get help as you would with anything else. Many lawyers are good with the docs but miss the larger picture at the term-sheet stage. 3. Model the outcomes. Know what the different terms mean to you in real dollars to varying levels of exits. 4. Don't negotiate any term individually. It's a basket. 5. Think about the next round, not just this one.

When negotiating term sheets, some terms hold more weight than others—namely, valuation, equity stake, and liquidation preferences. For example, Spotify secured terms that allowed the founders to retain more control and ownership, which set them up well for their IPO. In contrast, WeWork’s early investors negotiated liquidation preferences, which affected later rounds and eventual payouts during its decline. It’s crucial to focus on terms that align with long-term growth and exit strategy rather than getting bogged down by less critical clauses.

When you have multiple term sheets, it’s essential to carefully weigh the full picture beyond just numbers. Investors aren’t just providing money—they’re partners in your growth. Look at their strategic value, such as industry experience and connections, and how they align with your startup’s vision. Be transparent in negotiations, but don’t fall into the trap of playing investors off against each other. The goal is to find a partner who’s a good long-term fit, not just the best short-term deal.

While flexibility is important in negotiations, there are times when the terms being proposed could jeopardize your startup’s future. Be clear on your non-negotiables, such as equity stakes, control provisions, or exit conditions, and ensure they align with your long-term vision. If the revised terms compromise your company’s values, ownership, or potential for growth, it may be a sign that the partnership isn’t right. Walking away can be difficult, especially if it feels like a rare opportunity, but protecting your startup’s interests should always come first. Trust your instincts and be prepared to explore other funding options if necessary.

Any investment is good investment," they said. We disagreed—and we're better for it. Some deals are traps in disguise. Flip the script with that term sheet. Make it your investor test. The right investor respects your dream and collaborates on terms. No fit? Walk away. Strength lies in rejecting the wrong deal, waiting for backers who share your belief. That’s your path to a lasting legacy, not just a flash in the pan.