Evaluating
Venture Capital
Term Sheets
Universal MobilAps, Inc.
Venture Capital
Session 5 – September 29, 2016
Case: Stanford Business School E-460
© 2016 Viney Sawhney
,Evaluating VC Term Sheets
Universal MobilApps, Inc.
■ This is the first institutional funding for the young
start-up:
■ Several of the terms that are incorporated into this
funding will impact future investments
■ A funding agreement will influence how those will
be addressed in future funding rounds
■ Requirements for a qualifying IPO
■ Anti-dilution provisions
It is important that the entrepreneurs carefully
consider what is important to them in the
Series A agreement
© 2016 Viney Sawhney 2
, Evaluating VC Term Sheets
Top Gun vs Red Baron
■ The decision to take money from a venture
investor and the choice of the investor has great
importance for the entrepreneur:
■ Terms of the funding impact many aspects of the
start-up company
■ Economics of the returns the founders will realize if
the company is successful
■ Control of critical corporate decisions
■ Consequences of falling short of expectations
■ Set precedent for future financing rounds
Moreover, entrepreneurs want to take investments
from VCs that they will be able to work with
effectively on an on-going basis
© 2016 Viney Sawhney 3
Venture Capital
Term Sheets
Universal MobilAps, Inc.
Venture Capital
Session 5 – September 29, 2016
Case: Stanford Business School E-460
© 2016 Viney Sawhney
,Evaluating VC Term Sheets
Universal MobilApps, Inc.
■ This is the first institutional funding for the young
start-up:
■ Several of the terms that are incorporated into this
funding will impact future investments
■ A funding agreement will influence how those will
be addressed in future funding rounds
■ Requirements for a qualifying IPO
■ Anti-dilution provisions
It is important that the entrepreneurs carefully
consider what is important to them in the
Series A agreement
© 2016 Viney Sawhney 2
, Evaluating VC Term Sheets
Top Gun vs Red Baron
■ The decision to take money from a venture
investor and the choice of the investor has great
importance for the entrepreneur:
■ Terms of the funding impact many aspects of the
start-up company
■ Economics of the returns the founders will realize if
the company is successful
■ Control of critical corporate decisions
■ Consequences of falling short of expectations
■ Set precedent for future financing rounds
Moreover, entrepreneurs want to take investments
from VCs that they will be able to work with
effectively on an on-going basis
© 2016 Viney Sawhney 3
