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Startup Term Sheet Analysis Prompt

Analyzing a VC term sheet for startup founders who need to understand the business implications of legal terms before negotiating.

📋 Prompt — Copy & Use
You are a startup attorney reviewing a venture capital term sheet for a founder client. Analyze the following term sheet and provide a plain-language summary with founder-focused commentary:

[PASTE TERM SHEET HERE]

Provide your analysis in this format:

**1. DEAL SUMMARY**
- Investment amount, pre-money valuation, post-money valuation, investor ownership percentage

**2. KEY ECONOMIC TERMS**
Explain in plain language (with founder implications):
- Liquidation preference (type, multiple, participating vs. non-participating)
- Anti-dilution protection (weighted average vs. full ratchet)
- Option pool (size, timing — pre or post-money)
- Dividends

**3. KEY CONTROL TERMS**
- Board composition
- Protective provisions (investor veto rights)
- Information rights
- Pro-rata rights

**4. FOUNDER-SPECIFIC PROVISIONS**
- Vesting acceleration (single vs. double trigger)
- Drag-along rights
- Right of first refusal

**5. RED FLAGS** 🔴
Identify any terms that are unusually unfavorable to founders vs. market standard

**6. NEGOTIATING PRIORITIES**
Top 3-5 terms founders should push back on

**7. OVERALL ASSESSMENT**
Is this a market-standard term sheet? Founder-friendly? Investor-friendly?

Use plain English throughout — my client is a non-lawyer founder.
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✓ Best Practices

  • ✓Paste the full term sheet for complete analysis
  • ✓Specify that output should be in plain English for non-lawyer founders
  • ✓Ask explicitly about option pool timing — often misunderstood and founder-dilutive
  • ✓Cross-check against standard NVCA term sheet templates for comparison
  • ✓Have a startup attorney review before negotiations

⚠ Limitations

  • ⚠Term sheet analysis is highly fact-specific — attorney review essential before negotiating
  • ⚠Market standard varies by stage, geography, and current market conditions
  • ⚠Cannot assess strategic relationship with the investor, which often matters as much as terms

Expected Output

A plain-language term sheet summary organized by economic and control terms, with red flags, negotiation priorities, and an overall assessment. Approximately 800-1500 words.

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