Green Shoots update…
How to nail a term sheet negotiation?
After all the work in creating an investable business, glossing up a deck, pitching to anyone who will listen (as well as whoever they can introduce you to), and finally, the day has come. A term sheet lands in your inbox… now what?
Green Shoots winning Founders continued with their business support workshops with delving into term sheets and legal issues with Seven Legal with Bill Cogan & Pippa Watmough
Bill Cogan is the Founder of Seven Legal, a legal consultancy focused on the pain points entrepreneurs encounter going from Seed to Series B when template documents and platforms give way to more complicated legal negotiations.
“Access to legal advice is changing with new business models, technologies, and a focus on the customer journey for clients. We want to be at the forefront of those changes for our clients and our lawyers.”
Bill set up Seven Legal to give entrepreneurs access to top-tier advice delivered from a lean operational infrastructure meaning founders gain access to high quality, stage-specific advice without burning through their hard-earned capital. Bill was joined by his colleague Pippa Watmough the polymath Home Grown Ambassador, entrepreneur, and lawyer.
Most entrepreneurs did not start their business with a background in negotiating against seasoned investors. As with any negotiation, it is crucial to have an awareness of both sides’ motivations, where incentives are aligned, and the points in the future where they may diverge.
From the entrepreneur’s perspective some bright-line rules are that you ideally want to get through each round with the ability to: (1) raise more funding; and (2) exit the business. Controls over either of these can be existential to your business or a liquidity event when an exit offer materialises. Investors will of course want to protect from excessive dilution and maximise their return on exit.
And so the dance begins…
Bill and Pippa walked through a term sheet, current market norms for VC fundraises, and highlighting where Founders can maximise their leverage on economic, control, and administrative issues. The workshop was followed up with a lively Q&A delivered at the Club as a welcome return to in-person events.
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