The VC term sheet items all startup founders should watch out for - Business Insider

The following recommendations are based on Business Insider's interviews with expert sources — including founders, investors, and lawyers — as well as the analysis of several guides and resources by our team of editors and reporters who frequently cover these issues.

Also, your valuation is dependent not just on the amount of money invested, but on the percentage of ownership that gets exchanged. In some cases, a smaller investment could lead to a higher valuation than a larger one after you consider the equity stake. The size of the option pool is typically between 10% and 20% of total shares, and is a factor in your company's valuation. And as with valuations, bigger isn't necessarily better. Once again, choose the one that fits your startup's current needs and future goals.A good investor brings a lot more than just their money, and the smart founder will be open and responsive to their expertise and advice.

Sometimes bad stuff happens. If it does, this section outlines the priority with which you must deal with your financiers. If a business fails, creditors like bond-holders and secured debt lenders are first in line to get their money back.

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