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In Silicon Valley, Shorter Term Sheets Make for Faster VC Deals

June 05, 2014

​Fenwick & West corporate partner Sam Angus spoke with the Daily Journal about the trend toward shorter term sheets.

For venture capital firms and entrepreneurs in Silicon Valley, term sheets define the core provisions of transactions, and now, term sheets are getting shorter as timing becomes increasingly important and investors look to close deals quickly.

Many deals are similar in nature and much of the extraneous information can be removed, Angus told the Daily Journal. He said that any deal will include stipulations on the size and pricing of the investment, participating investors, liquidation preferences, restrictions on founder stock, basic investor protections, the size of employee option pools and rights of first refusal, and it’s no longer necessary to go into a detailed description of these terms at length.

"Those things need to be addressed in the term sheet, but even then there's a recognition that we don't need to go into every detail," Angus said. For example, he said, there’s no need to negotiate hypothetical terms such as what happens if a company goes public during its Series B funding. "It's irrelevant at that point and unnecessary to negotiate it."