All types of financing have terms, which are the important nitty-gritty details that specify how the financing works for all parties. Understanding all of those details often takes hard work, but as the saying goes “the devil is in the details.” An important part of our mission is to help entrepreneurs understand these details.
Debt terms include type of debt (term loan, line of credit, etc.), amount, nominal interest rate, how interest is compounded, fees, term (duration), collateral required (if any), and guarantees.
Equity financing terms can include valuation, liquidation preferences, employee option pool, vesting, anti-dilution, board rights, information rights, and many more that get summarized in a term sheet.