Y Combinator Safe, 500 Startups KISS, and other “standard” term sheets cannot claim they are founder-friendly, reveals study by 6 startup attorneys.
Nearly every hour of my spare time since May 2019 has gone into this research study to determine if “standard” term sheets really are founder-friendly. It feels amazing to be finished! Here is what we found.
Six attorneys analyzed 298 pages of legalese from:
- Y Combinator Safes
- 500 Startups KISS notes
- NVCA Model Legal Docs
- Gust Series Seed term sheet
- Sam Altman ‘Founder-Friendly’ term sheet
- Y Combinator Series A term sheet
Compared to Founder Friendly Standard®, a framework for determining if a venture capital or angel investment deal is founder-friendly, the above “standard” term sheets and contract templates were on average:
- A little more than a third (38%) founder-friendly as defined by being compatible with Founder Friendly Standard.
- Just under a third (32%) founder-unfriendly as defined by being incompatible with Founder Friendly Standard.
- Nearly a third (30%) silent on the issues in Founder Friendly Standard.