This note offers a new approach to venture capital term sheets negotiations with actionable steps on findings from Professor Wasserman’s “Rich-vs.-King” Approach to Founder decisions. A central thesis of this note is that the attempt to understand all terms in a term sheet negotiations be less effective than focusing on the terms that are most important to the specific business in question, taking into account the entrepreneur’s goals and motivations in starting the venture. In particular, concepts that are … Read more »

This note offers a new approach to venture capital term sheets negotiations with actionable steps on findings from Professor Wasserman’s “Rich-vs.-King” Approach to Founder decisions. A central thesis of this note is that the attempt to understand all terms in a term sheet negotiations be less effective than focusing on the terms that are most important to the specific business in question, taking into account the entrepreneur’s goals and motivations in starting the venture. In particular, terms that motivated a higher priority to a control “King” founders are often low priority to a wealth motivated “rich” founder and vice versa. Thus, this note identifies the common terms that differ in their importance to different types of entrepreneurs and provides a framework for weighing the relative importance of each potential term sheet result for their specific type.
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Noam Wasserman,
Furqan Nazeeri,
Kyle Anderson
18 pages.
Release Date: 17 March 2010. Prod #: 810119-PDF-ENG
A “Rich-vs.-King” Approach to Term Sheet Negotiations HBR case solution

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