Article · 25 min read

NVCA Term Sheet Standards: What Founders Must Know About Economics and Control

Glencoyne Legal team · Glencoyne Free Intermediate

This is the ranked view of which terms actually bite, grounded in the NVCA model documents that most institutional term sheets are built on. It separates the economics (valuation, option pool, liquidation preference, anti-dilution) from control (board, protective provisions) and gives the market-standard value against the founder-unfriendly one for each. The worked $30M exit scenario showing 1x non-participating versus 1x participating, and the option pool shuffle walkthrough with real numbers, make the money at stake concrete instead of theoretical.

• The option pool shuffle: investors size the new pool into the pre-money, so a 15% pool quietly comes out of your shares before their capital lands, effectively lowering your price per share
• Standard vs unfriendly is a clear line: 1x non-participating and broad-based weighted average are market; participating preferred and full ratchet are the ones that cost you at exit
• Protective provisions and information rights read as boilerplate but decide who can veto your next raise or your sale, so read the control section as carefully as the economics