Year: 2017

A majority of founders today seem to be comfortable with stock vesting provisions in termsheets. However, still encounter a few (usually first-time) founders who see vesting as investor tactic to gain more control. Some feel they’re being forced to ‘earn’ ownership in their own ventures.

This interpretation of vesting is harmful. Investors invest in the mid-long term future potential of a startup, and the team sticking around to achieve its ambitions is key. A non-executive founder (w/o day-to-day role) is as good as dead equity. If a founder leaves, it’s a big blow to the execution ability of a team.

Of late, I’ve been in few discussions where investors proposed terms that honestly were counter-productive. Early investors often don’t realize they set the stage for future. If they set bad terms, they’ll get retained in future rounds & come back to pinch them.

So here’s a list of terms that angels & startups should strongly avoid.