Map the deal
Organize a proposed financing into money, economics, control, and process. Different documents govern different parts of the relationship. The main guide links to NVCA materials as a reference point while emphasizing that model forms require professional adaptation.
Compare on the same basis
Pre-money and post-money valuations describe different points in a transaction. An option-pool increase or converting instrument can change the shares issued at a given headline valuation. Start with the clean example, then add each actual adjustment explicitly.
Ask about disappointing outcomes
An optimistic exit estimate can hide important preferences. Work through a lower-value case and identify the available proceeds, claims ahead of common holders, and conversion assumptions. Ownership percentages and payout percentages need not be identical.
A term sheet is a package of economics, rights, and responsibilities.
Go Deeper into VC Equity
Venture Capital Equity: Valuation, Preferences, and Control
Explore venture capital equity with clear examples of pre-money valuation, liquidation preferences, option pools, governance, and financing trade-offs.
Stock Equity Explained: Shares, Rights, and Real Ownership
Understand stock equity, common and preferred shares, ownership percentages, market value, and the questions to ask before interpreting a holding.
Private Equity Explained: Funds, Buyouts, and Ownership Economics
Separate private equity fund interests from company ownership, and examine buyout financing, cash flows, performance measures, fees, and incentives.