Term sheet read-through — what each clause actually does

NEEDS-REVIEW: Placeholder. Inception's legal partners + mentors should co-author the real version.

Typical clauses

Valuation + amount

• Pre-money, post-money, option pool — make sure you understand which one the headline number references
• "Pre-money plus pool" is the most founder-friendly framing; "post-money minus pool" shifts dilution to founders

Liquidation preference

• 1x non-participating — accept as standard
• 1x participating — pushback warranted
• Multiple preferences (2x, 3x) — red flag, walk

Board composition

• Common seed: 2 founders + 1 investor
• Series A: 2 founders + 2 investors + 1 independent
• Watch for board seat language that converts at next round

Anti-dilution

• Broad-based weighted average — accept as standard
• Full ratchet — almost always pushback; punitive in down rounds

Pro-rata rights

• Standard for lead investor, sometimes for others
• Major investor only is fine

Vesting

• Standard founder: 4 years, 1-year cliff
• Acceleration: single trigger on acquisition is reasonable; double trigger (acquisition + termination without cause) is standard

Inception-specific guidance

(Real authoring: which legal partners Inception recommends, how the retreat helps founders read their first term sheet under time pressure.)