How to negotiate termsheet for entrepreneurs



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About the Course

Total Fees: INR 3,000 2,000

Get immediate access on Web, Android and iOS on enrolment

Duration: 1 month

Why you need to know how term sheets are negotiated

Although a term sheet is just an informal early stage non-binding agreement between an investor and start-ups, it is critical to understand the importance of it is by far the magnetic compass that sets the tone for later documents.

The terms of laid down as mere bullet points in a term sheet forms the fulcrum on which rest of the paperwork is designed and negotiated, from funding, corporate governance to exit terms. It is, therefore, a blueprint of future legal relationship between investors and the entrepreneurs.

Term sheets have a jargon of their own which might overwhelm the entrepreneurs and amateur lawyers alike and special attention must be paid to it. This is a repeated exercise and part of angel or VC/PE funded business ecosystem. Any failure to not learn these ropes adequately can lead to potentially damaging impact on the future of any business, its employees, founders and co-founders. The recent showdown between Shopclues co-founders is a case-in-point. 

Points to remember for a lawyer and entrepreneur vis-a-vis termsheet?

There is no clear set of rules and steps to be followed while negotiating a term sheet. Each term sheet and business is unique and requires specialized study to formulate adequate premises to seek bargain on one’s own terms.

As a lawyer, you are acting in best interests of your client (the investor or the entrepreneur) and need to be their wing-person. It is critical that you pay attention to the valuation method that would add maximum value to the business where neither party feels cheated. Minor changes or variations in the valuation method employed can lead to staggering differences in the value of stakes in a company and its potential for growth. A successful negotiation requires both parties to feel win-some in the end. A poorly employed valuation methodology can break a business in no time.

As an entrepreneur, you must focus on raising as much capital as possible without giving away too much of ownership with clear idea on what your exit plans look like. Most of times, founders and investors have wildly different interpretations of what exit would resemble like!

As a lawyer, you need to work closely with your entrepreneur or investor to gain a clear picture of the outlook on the returns expected from the business and consequences of missing business milestones. Most of the times, investor prefer to keep liquidation preference intact in order to protect their funds in case a company were to go into liquidation.

Board representation and veto powers can have significant impact on corporate actions in a company. It may appear immaterial during the good times but can cause immense confusion during stressful times. There is overt attention paid to non-compete clauses in an agreement but little focus is given to intellectual property assignment clauses which ultimately help a company differentiate and create value.

Negotiating Termsheet = Managing Risk Efficiently

  1. Learn how anti-dilution clauses are critical to your business and consult your lawyer thoroughly to understand the intricacies that govern it
  2. Thoroughly understand the implications of “drag-along” provisions in your business. It can lead to unmanageable complications arising at the time of selling the company
  3. The capital structure of your business emerging out of this deal can strongly influence your future ability or inability to raise capital in any business
  4. “Right of first refusal” can prove to be an albatross around the neck if and when you raise further capital or choose to liquidate your losses 

Learn how to align your business interests with that of your investor in the bullet points of the term sheet and create a future proof partnership to realize your business objectives by enrolling in this online course.

Access the valuable course content via our digital LMS which is responsive and compatible with all device-types.

How can I access this course

It is simple and a matter of few clicks

Click on Enroll Now Button

1. Login to the Portal through Facebook Account
2. Make Payment via the Instamojo Link
3. Upon successful registration and payment, you will be able to access the course after 2 hours
4. Since the course is completely delivered online, you can access it on the move
5. Our robust learning management system is well optimized across all devices.

Happy Learning!

The brains behind the course

The course has been created by veterans such as Abhyuday Agarwal, Sameer Jain (Partner, Pamasis Law Chambers) and Suhas Baliga (Principal, Impact Law Ventures). The team credited with creating this course comes with a cumulative team experience of 90 years of expertise.They have strived hard to blend the nuances of practical and theoretical world in the field of Corporate Finance

Is this course certified

Yes, Absolutely. This online course is certified by iPleaders (a legal education platform of Intelligent Legal Risk Management Solutions LLP), a leading online education start-up which is committed to make quality education accessible and affordable to masses. Industry veterans and stalwarts are part of iPleaders’ Academic Panel to offer a relevant blend of theoretical and practical application of the law and business expertise.

Hurry and avail our early-bird discount and ace negotiating termsheets in just 1 month!

 

Course Contents

Stages in startup fundraising (lessons from case study of Instagram)
Stages in an investment transaction
Interests that an entrepreneur seeks to protect
1. Control of the business and freedom to take business decisions
2. Valuation
3. Limitation of personal liability
4. Availability of alternative options if the business fails
How your interests interact with real clauses in investment documentation

Affirmative voting rights or investor vetos
Board Representation
Observer Directors

Equity, preference shares, convertible preference shares, redeemable and non-redeemable shares, notes and warrants
Optional or automatic conversion
Pre and post-investment capitalization table
Treatment of option pools
Implications of fully diluted basis calculations
Treatment of personal property, loans and founders’ contribution

Anti-dilution & Ratchet Clauses (Narrow-based and weighted average)
Liquidation preference
Non-compete and non-solicitation clause
Conversion prices
Personal guarantees of promoters

Right of first offer and right of first refusal
Tag and drag-along rights
Put options and buy-backs
Strategic sale
IPO

Subscription Agreement
Share Purchase Agreement
Shareholders Agreement
Employment and Confidentiality Agreements
Intellectual Property Agreements
What you should keep in place for a successful due diligence exercise on your business

Facebook’s Case study
Google’s case study for ESOPs
RedBus Case Study for founder’s dilution and ESOPs

Industry Academia Panel

Abhyuday Agarwal

COO and Co-founder, iPleaders

Sameer Jain

Partner at Pamasis Law Chambers

Suhas Baliga

Principal, Impact Law Ventures

Success Stories

Imagine how it would be if you could navigate the usual legal and regulatory mess with ease, and make better decisions as you scale your business or career growth. Regulatory and legal difficulties is a huge hurdle to doing business in India, and very few people have mastery over it. We are inviting you to find out more about how we can add a touch of magic to your growth. Here are some amazing success stories of our students who have taken up our courses.

I am a computer science engineer by education, but an entrepreneur by profession. Having had no formal education in running a business I was always led to a lot of "learning the hard way". When iPleaders launched the course for Entrepreneurship Administration and Business Laws, in an e-learning mode I took up the course with the objective to understand all legal nuances related to running a business. The course covered things like; understanding of ESOP, Sweat Equity, Company Policy, License agreements, IP related law, EULA and lots of other content which made sense for our business.

Atul Gupta

Managing Director of InSync Tech-Fin Solutions Ltd

I joined the NUJS diploma in Entrepreneurship Administration and Business Laws while I was working with the Calcutta Stock Exchange. I had already done my LLB and was looking for a course which would give me some practical insight. I came across the NUJS Diploma in Entrepreneurship Administration and Business Laws while searching the internet. I was looking for some course for value addition to my profile and knowledge. I had already done my LLB and MBA but wanted some practical knowledge. This course appealed to me, as it was dealing with business laws and I was working with a corporate. So this course was very significant to me and covered things which were relevant to me.

Sumit Sengupta

CFA, LL.B, Legal Counsel, Calcutta Stock Exchange

All modules in this course are meticulously designed with the emphasis on practical knowledge and it's very difficult to say which module was more informational than the other. Still, I particularly found the modules on statutory compliances, due diligence, business structuring and institutional financing to be really beneficial for me because I wanted practical insight into these topics. Non-lawyers such as businessmen are usually afraid of legal jargons that are found in books; however, this course uses a very simple and easy to understand language and therefore I recommend this course to all those who wish to enhance their business law knowledge.

Harshal Joshi

Legal Head, Legal Dog, LL.C

This course is something that would simply catalyze the process and help you in creating the best path for yourself. Being armed with a diploma in law from a prestigious national law school in itself speaks volumes – it gives the signal to the people working with you that your understanding of legal and regulatory situation should be and can be taken seriously. Given the kind of work I'm into, it does help a lot indeed, especially as one climbs the stairs of seniority and responsibility. The early headstart in legal strategy making and insights into dispute resolution is also a superb advantage.
Also joining the course has given me a new fraternity. It indeed feels great to have been associated with iPleaders…and I would be glad to continue with this relationship. I continue to get professional support from them. You can always reach out to the alumni or iPleaders founders themselves and ask for a favour.
I would strongly recommend this course to people (age no bar, beyond fulfilling the eligibility criteria) who are interested in bringing out something new (in any form) which shall be innovative and meaningful in the long run, and those who are interested in organization building – as the course helps in minimizing the number of legal and strategic hurdles that one may face after taking the plunge. You will be much more educated and smart with respect to a whole range of things once you even go through the course even partially.

Abhilash Acharya

Doctoral Fellow, IIM Ranchi

The placement support program offered by iPleaders was useful in securing my first job at Innove Law (a niche corporate law firm in Mumbai).

Unnita Bhattacharya

Associate at Krishnamurthy & Co.

This course has given me valuable insights such as drafting various agreements with clients, dealing with clients, and also choosing right organization structure my own venture and was able to help other entrepreneur in structuring their new venture.
Skills I learned during the course structuring a company, appoint advisors and remunerate them, drafting Co-Founder's Agreement, taxation of software product and SAAS companies, clear understanding of Shareholders' Meetings, legal instruments, Shareholders' Agreement, how to raise investments effectively, drafting employment agreement, Structuring ESOP& ESPS, How to avoid disputes and drainage of resources through courtroom battles, Data protection under Indian law, Cloud computing agreements, How to obtain copyright, trademark and patent registration in India.
Definitely student entrepreneurs studying in college will get a lot of benefits from this course. Interested students will be motivated like me to pursue their entrepreneurial journey keeping balance with various entrepreneurship network system, they can easily create a successful business venture without any hindrance.

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