Priced rounds and the term sheet terms that matter

A lead investor offers a term sheet setting the price, the amount and the rights that come with the new preferred stock. Once it is signed, lawyers draft the definitive documents, the investor runs confirmatory diligence, and the round closes when the money arrives and the new charter is filed. Any SAFEs and convertible notes convert at the same time.

The math is simple: post-money valuation = pre-money valuation + new money, and the investors' ownership is the new money divided by the post-money. Raising $3M at a $12M pre-money gives a $15M post-money, and the new investors own 20%.

• No-shop. Signing usually starts an exclusivity period, often 30 to 60 days, when you can't solicit other offers. Sign only when you are ready to stop talking to other investors.
• Timing. Closing commonly takes four to eight weeks after signing: definitive documents, confirmatory diligence, board and stockholder approvals.
• Legal costs. The company usually pays its own counsel and the lead investor's legal fees up to a cap set in the term sheet.
• Closing conditions. Typical ones include updated IP assignments, a clean cap table, and sometimes D&O insurance or key-person items. Knowing them early avoids a late scramble.
• Comparing term sheets. Compare post-money, option pool, liquidation preference, board seats and protective provisions, not just the headline price.

Most US venture rounds use the NVCA model legal documents, which are free to download: the term sheet, stock purchase agreement, amended certificate of incorporation, investors' rights agreement, voting agreement, and right of first refusal and co-sale agreement. NVCA's October 2025 update added mechanics for tranched financings, where money arrives in stages tied to dates or milestones. Starting from the standard set keeps legal costs down and makes unusual terms easy to spot.

• Price and valuation. The headline number, but read it with the option pool.
• Option pool. Investors usually ask for a new or enlarged pool counted in the pre-money, so the dilution falls on existing holders. Raising $3M at a $12M pre-money with a new 10% pool: the pool takes $1.5M of the $15M post-money, so the effective pre-money for existing holders is about $10.5M. Converting SAFEs and notes usually sit in the pre-money too, so their dilution also falls on existing holders, not the new investor. Size the pool to a real hiring plan.
• Liquidation preference. Standard is 1x non-participating: 98% of deals had a 1x preference and 96% were non-participating in Cooley's Q1 2026 data. Multiples above 1x or participation are a sign of a harder deal.
• Anti-dilution. Broad-based weighted average is standard; full ratchet is rare. In Cooley's Q3 2024 data, every deal used broad-based weighted average.
• Dividends. Usually non-cumulative and only if declared. Cumulative dividends add to the preference over time.
• Pro rata rights. The right for investors to keep their percentage in future rounds.

• Board composition. A Series A lead usually takes a board seat. A common shape is two founder seats and one investor seat, growing to include an independent director later. Who controls the board matters more than any single economic term.
• Protective provisions. Decisions that need the preferred stockholders' approval, such as selling the company, raising new senior stock or changing the charter. Standard lists are fine; operational vetoes are not.
• Drag-along. Requires stockholders to vote for a sale the board and a set majority approve.
• Right of first refusal and co-sale. Limits on founders selling their own shares.
• Information rights. Financial statements and budgets investors are entitled to receive, which your monthly close needs to support.

Median dilution was about 18% to 19% at seed and Series A and about 13% to 14% at Series B in Carta's 2026 data. Down rounds have run at about 12% to 13% of deals in Cooley's recent quarterly reports. Investor-friendly terms such as participation and multiple preferences show up mostly in down rounds and in companies with little leverage, so a clean term sheet is itself a signal of a strong round.