John Dimmer/The Term Sheet Article

After reading the article "How to Negotiate a Term Sheet," given to us by our guest speaker, John Dimmer, I must say that the term sheet is a document that I could see it confusing a great many people with complex legal jargon, however I felt that the article did a decent job dialing down the rhetoric. If I was an entrepreneur, this document would make me extremely nervous, while it was in its negotiating phase. I can certainly see the benefit of legal consultation in this case.

I must say that I didn't quite care for the concept of reverse vesting. The entrepreneur puts a lot of his or her time into the development of the business, just as the VC has put a lot of money into it, and should have the same ownership rights as the VC, albeit at a somewhat different scale. The founder's shares should not have to earned back.

One of the terms that I had a problem in understanding was that of anti-dilution. It should have made since to me if I had seriously taken the time to consider the term itself, but the way the article explained it made it more confusing, forcing me to look to outside sources that did a better job of explaining it. After I understood what anti-dilution meant, I can certainly see why someone would want that protection. Why should someone's originally negotiated ownership in the company be decrease because of a decision made by management to sell more shares of stock in the company?

After all is said and done, the term sheet is not a document that should be taken lightly, as it can seriously impact the rights that you have to control your business. It is not something that the individual investor should negotiate themselves, without an attorney.