Your first term sheet is exciting, and full of terms that can quietly shape your company for years. Understanding the basics before you sign is one of the most valuable things a founder can do.
Valuation and dilution
The valuation determines how much of your company an investor gets for their money. Every round dilutes existing shareholders, so know your pre- and post-money numbers.
Terms that matter beyond price
- Liquidation preference: who gets paid first, and how much, if the company is sold.
- Board seats & control: who makes key decisions.
- Anti-dilution: protection for investors if you raise later at a lower price.
- Vesting: founder shares earning over time.
A founder's rule of thumb
Don't optimise only for the highest valuation, the terms can matter more than the headline number. A slightly lower valuation with clean terms often beats a high one loaded with investor protections.
Read every clause, model the dilution, and get experienced eyes on it before signing. A term sheet is the constitution of your cap table.
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This article is for general information based on rules current at the time of writing and is not professional advice. Rules change — confirm specifics with a Govyapar expert before acting.
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