Note that I am not saying an entrepreneur shouldn’t get a competitive process going and try to get the best deal with the highest quality investors. You just need to do it in the right way. Discuss things verbally and only accept a term sheet when you have agreed on all significant terms. At that point, assuming the term sheet agrees with what you said, you should sign it and return it within a day or two. (Don’t say you need to wait for you lawyer to review it – if you want to be an startup CEO you need to learn how to review and evaluate term sheets. Have your lawyer teach you about term sheets before you receive them.).

Russian Roulette (game show)Image via Wikipedia / Don’t shop your term sheet

this is how i like to do it too. and in the vast majority of cases I haven’t sent out a term sheet without an agreement in principle. but there have been exceptions like everything else in the world.

(via bijan)

Rafer sez:
Wow, stop the f—-ing train. Never, ever, ever sign a term sheet without your attorney reviewing it. That’s crazy talk. By all means have discussed all the major terms in advance of getting paper, but that’s not the point. I know how to read the things very well, but I’m not an attorney, and it’s a legal document (non-binding or otherwise).

If you can’t find an attorney that will get the work done in the completely reasonable day or two suggested, and for a reasonable price, get in touch with Ropes & Gray. Tell ‘em @orenmichels and/or I sent ya.

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