Priced rounds and term sheets
Market term sheet terms
A clean US seed or Series A baseline — 1× non-participating, weighted-average anti-dilution, sensible board, hiring-justified pool.
Markets cycle. Use counsel who closes deals weekly, and treat the following as a baseline for clean US deals as of 2025–2026 — not a guarantee.
| Term | Healthy market baseline |
|---|---|
| Liquidation preference | 1× non-participating |
| Anti-dilution | Broad-based weighted average |
| Board at seed | Often founder-controlled; sometimes 2 founder + 1 investor |
| Board at Series A | Commonly 2 common, 1 preferred, path to independent |
| Option pool | ~10% post-money unallocated is a frequent ask; negotiate from a hiring plan |
| Participation rights | Major investor pro-rata is standard; super pro-rata is a concession |
| Dividends | Non-cumulative, unpaid in practice |
| Redemption rights | Push back hard at early stage |
Participating preferred, multiple preferences (2×+), full ratchet anti-dilution, and heavy veto lists show up more in distressed or insider-led rescues. If they appear in a competitive primary round, ask why.
The big idea
"Market" is a cluster of defaults, not a law. Saying "that's not market" only works when you can point to a source: NVCA forms, Cooley GO, your counsel's last twenty deals, or published surveys. Bring a specific ask: "1× non-participating, broad-based weighted average, pool sized to the attached 14-hire plan at 10% post." Vague pushback invites vague concessions.
Trade-off
If you must concede, prefer giving a bit more dilution or a slightly lower valuation over giving away the board or accepting participating preferred. You can dilute again later if the company works; you cannot easily unwind a hostile governance structure. Protect governance and preference structure first, then fight on price.
Counsel who does venture deals constantly matters more than brand alone — stage and geography count. Send the sheet to counsel before signing when you can; a one-hour review catches non-market prefs. Founders own the commercial points; lawyers own consistency with Delaware law and NVCA norms. Do not outsource the ownership math.
Common mistakes
- Accepting participating preferred or a full ratchet in a competitive round "to keep momentum."
- A generic 15% pool with no hiring plan. That is a price cut.
- Treating redemption and cumulative dividends as boilerplate without reading them.
Check yourself
What is the market liquidation preference on a healthy Series A?
1× non-participating.
A sheet offers 2× participating and full ratchet in a competitive primary. What should you ask?
Why these distress terms are in a competitive round — and plan to push them off.
Key takeaways
- Baseline: 1× non-participating, broad-based weighted average, sensible board, hiring-justified pool.
- Distress terms in a hot primary are a question, not a default.
- Specific asks beat "that's not market."
Further learning
NVCA Model Legal DocumentsModel Legal Documents The NVCA Model Legal Documents serve as the industry-embraced model documents to be used in venture capital financings. What's new: Most recently, the NVCA model documents were revised to reflect…National Venture Capital Association - NVCA -
Cooley GOCooley GO offers a wide range of legal resources to high growth companies – from formation to M&A and IPO.Cooley GO
Next, negotiating the sheet.
Related
Term sheets: an overview
The anatomy of a VC term sheet — economic vs control terms, what is binding, and what to negotiate first.
Liquidation preferences and waterfalls
Who gets paid first in an exit — the map of 1× non-participating, participation, multiples and stacked seniority.
Anti-dilution protection
Extra conversion-price math for old preferred when a later round is cheaper — not ordinary new-money dilution.