The East Coast Term Sheet
Interesting thoughts on term sheets from Bijan Sabet. I had lunch with a friend this week who recently had a bad VC experience. This anecdote seems like an example of the traditional attitudes around VCs that still prevails in some cases. Of course the good news is there also seems to be an exciting movement of openness, collaboration and mentoring among a lot of great investment firms like Founder Collective, Y Combinator, First Round, Union Square and others…and that attitude seems to be percolating throughout the industry.
via bijan:
Last week, i was at an event chatting with a few VCs.
One of the VCs who is from silicon valley, asked if we ask for “East coast terms”.
Before I could reply, another Boston-based VC said that he uses an east coast term sheet for local investments and but uses his west coast term sheet for bay area investments.
There were too many things going on for me to interject but I’m not sure what they are talking about.
I invest in startups on the east coast and west coast. I don’t have do anything strange or unusual in our term sheets and closing documents. I use the same terms regardless of the location. The only exceptions is if there are co-investors or note holders that need to convert or something else that existed before my investment
The only thing I can think of between east and west coast term sheets is that some east coast VCs lock up startup employees with non-compete agreements and they can’t do that with California employees.
I’m against employee non-compete agreements so I don’t ask for them in either case (unless I’m working with a co-investor that requires it and I convince them otherwise). I don’t get the double standard and probably never will.
Otherwise, I use highly competent law firms that understand what’s important in startups like Gunderson Dettmer and Fenwick & West. There are a few important terms (valuation, option pool, protective provisions) and then everything else is just boilerplate at this point.
But I don’t understand the idea of different terms for different coasts. Doesn’t seem fair or right to me.
