Who will benefit from this course?

Anyone who wants to understand VC deal terms

  • Venture investors

    The right deal terms can make a big difference in a VC investment. Make sure your term sheets are helping you do good deals for both sides.

  • Traditional investors

    Learn to avoid the big mistakes that investors new to VC often make in their deal terms, which can alienate good start-ups or cause problems in future funding rounds.

  • Entrepreneurs

    Lack of knowledge of VC investment terms can have a significant negative impact on entrepreneurs, affecting both their economics and control of their company.

What will I learn in this course?

How to draft and understand a VC term sheet

After successful preliminary negotiations, the deal between investor and entrepreneur will move to the next stage, in which the investor will prepare and send the entrepreneur a term sheet outlining the key proposed deal terms. These detailed deal terms will then be negotiated and if agreed, the deal will proceed to detailed due diligence, final documents and deal signing and closing. Term sheet negotiation is the most important stage in the process as this is when key terms are agreed (or not), In this course we will learn about both economic deal terms determine how the economic fruits of the business will be shared between investor and entrepreneur and the control terms which enable VCs as minority shareholders to protect themselves against actions that majority shareholders might take which could reduce the value of their investment or which undermine their economic terms.

What will I get from this course?

This course is not about passive learning. Participants will be hands-on and will be equipped with a toolkit that they can immediately apply beyond the course. Participants will receive a customized review of a term sheet of their choice.

  • 3 hours of live interactive sessions with Expara CEO Douglas Abrams

  • A customized review of any term sheet you choose

  • 47 videos - 10 hours of viewing and 32 original articles for reading

  • Pro-forma Valuation Excel Model for start-ups

  • Start-up evaluation checklist and term sheet template

  • Access to Expara's network of more than 2,000 venture investors

  • Expara Academy Certificate of Course Completion

Course curriculum

  • 1

    Welcome to the course!

    • A message from the instructor

    • About the instructor

    • Connecting to my network

    • READ FIRST: How to complete the course

    • About Expara

    • Reading list for entrepreneurs and investors

  • 2

    Understanding risk and return

    • What is the relationship between risk and return?

    • Risk and return

    • Why fear risk?

    • Risk and return - Small versus scalable business

    • Overcoming the fear of failure

    • Reading: Risk and return

    • Reading - Two types of entrepreneurs

    • Reading - Fear and failure

  • 3

    Welcome to venture capital world

    • Welcome to venture capital world

  • 4

    Why do investors invest in VC?

    • Highest returning asset class

    • VC is the highest returning asset class

    • VC improves portfolio diversification

    • Reading - Why do investors invest in VC funds?

    • Reading - Top VC fund managers can consistently outperform

  • 5

    Why VC now?

    • Why VC now

    • Reading - Is moores law over?

    • Reading - Amaras law

  • 6

    Why do startups raise investment?

    • Scalable or lifestyle business?

    • Why should startups raise investment?

    • Reading - Why do start-ups raise money?

  • 7

    How do startups fund growth?

    • How to fund growth?

    • Which form of funding is best?

    • How to fund growth

    • Reading - What is the best form of funding for a start up

    • Reading - Only a moron starts a business with a loan

    • Reading - What is the difference between debt and equity?

  • 8

    High returns to VC investors

    • This could be you

  • 9

    How do VCs make money?

    • What kind of companies do VCs invest in?

    • How do VCs generate returns?

  • 10

    Evaluating investments - which companies generate high returns?

    • Which one is more scalable- product or service?

    • What sectors do VCs invest?

    • What kind of companies generate high returns?

    • Reading - What do VCs invest in?

    • Reading - Which scales better?

    • Reading - Good business vs good investment

    • Reading - What is the optimal time to enter a market?

  • 11

    How do VCs evaluate start-ups?

    • The investor’s decision tree

    • The investor’s decision tree

    • Key elements for success

    • Key elements for success

    • Reading - Three most important factors

    • Reading - Product market fit or team

    • Reading - Key elements of success

  • 12

    Investor and start-up communications

    • Communicating with investors

    • Investor and start up communication

    • Reading - How to connect with investors

  • 13

    Investment process

    • VC investment process

    • Capital and legal structure of the firm

    • Equity issued to whom

    • Key legal agreements

    • Why is the multistep fundraising process so important?

    • The start-up fundraising journey

    • Reading - VC funding process enables innovation

    • Reading - VC or Angel or CVC which is best

    • Reading - Who are venture investors?

    • Reading - What is FF and F?

    • Reading - What is OM and how much of it do you need?

    • Reading - The best and worst times to raise money

    • Capital and legal structure of a firm

    • 5 key agreements in venture capital deals

    • Reading - Key agreements in VC investment

    • Reading - Why not give up the minimum equity

  • 14

    Key deal terms and term sheets

    • Economic terms in term sheets: Part I

    • Economic terms in term sheets: Part II

    • Control terms in term sheets

    • Reading - Key terms in VC term sheets

    • An example of how liquidation preference works

    • What is founder vesting

    • What does a clean cap table look like

    • Convertible debt vs equity

    • SAFE notes

    • Key elements of the deal

    • Reading - Liquidation preference as valuation insurance

    • Cap tables

    • Reading: The 7 deadly sins of messy cap tables

    • Reading - What is founder vesting?

    • Download: Term sheet template and term sheet alternatives

    • Reading: How do VCs control startups after investment

    • Reading: Corporate structuring issues for VC investors

    • Reading: What forms of funding are used by VCs

    • Reading: What are convertible and SAFE notes and should we use them

    • Reading: Reserve matters and protective provisions

    • Reading: Retaining BOD control

    • Reading: What are reps and warranties

    • Reading: What is a drag-along clause

    • Reading: MFN and Pay to Play

    • Reading: What is redemption

    • Reading: What is anti-dilution protection

    • Reading: What are ROFRs and ROFOs and when are they bad

  • 15

    Venture funding downloads

    • Venture funding downloads

  • 16

    Submission: Customized term sheet review

    • Custom term sheet review

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