Article · 12 min read

A Standard and Clean Series A Term Sheet

Y Combinator Free Beginner

This is the reference point for what a clean deal looks like, written by the people who have watched hundreds of Series A term sheets cross their founders' desks. It names the exact clauses that quietly cost you (liquidation preference above 1x, participating preferred, cumulative dividends that compound the hurdle every year, and board or protective-provision language that hands investors operating vetoes) and teaches you to read the terms an investor insists on as a signal about how they see the risk. It ships with a downloadable clean template you can hold your own term sheet up against.

• 1x non-participating is the standard; anything richer (participating, multiples, cumulative dividends) is a red flag you negotiate before the price
• Board and protective provisions can hand investors control over budgets, hiring, and pivots even at a founder-friendly valuation, read those clauses as carefully as the economics
• The terms an investor pushes for reveal how risky they think the deal is, so a 'dirty' term sheet is also a signal about the investor