Using Terms Sheets to Mitigate the Risk

Using Terms Sheets to Mitigate the Risk

October 7, 2020 by investor

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

The terms sheet glossary contains over 125 terms that can be used. For every risk in the startup, there is a term to place in the terms sheet to mitigate that risk.

If you feel the valuation is too high, you can add a liquidation preference.

If you think the team needs oversight, you can add board seats and fill it with advisors who can help.

For maintaining an investor’s position in the deal, there are anti-dilution clauses, right to participate, and right-of-first-refusal terms.

For maintaining oversight over the operations, there are information right terms, board seats, and founder-vesting terms.

For achieving an exit, there are drag-along rights, redemption rights, and registration rights.

For the risks in the deal, engage the terms to mitigate those risks.


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.


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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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