The venture-backed startup ecosystem is not a “normal” corporate environment. In most corporate contexts, executives negotiating with each other are (relatively) matched in experience. In startup financing, however, VCs are often decades more experienced than the first-time founders with whom they are negotiating.

As a result of this knowledge asymmetry, the playing field is by default biased in favor of VCs. Anything that makes the negotiation process move faster than it truly needs to favors them, because time gives founders the ability to review, ask questions, negotiate, and shop for alternatives, narrowing the knowledge imbalance.

Further, equity round term sheets usually have an exclusivity provision, sometimes called a no-shop. This means that once the term sheet is signed, founders must (for 30-60 days) halt all discussions with competing firms and focus on closing this one deal.

Put these two facts together, and you get a conclusion that is the opposite of what founders often believe about term sheets. Founders often think short term sheets are great. They’re “simpler” and “faster,” which in the worldview of an entrepreneur usually means better.

But it’s false. Often dangerously false.

That short term sheet is not changing any of the inherent complexity of a startup equity round, including around economics or governance (power). The misleading simplicity is achieved by punting all the hard (but unavoidable) discussions until after the term sheet (with an exclusivity provision) is signed. The term “standard” – the most abused word in startup law and finance – will be repeatedly leveraged in that short term sheet.

“Standard” protective provisions. “Standard” vesting schedules. “Standard” voting for Board seats. A “standard” liquidation preference.

The truth is there is no single “standard.” There are standardized templates as starting points, but those templates are negotiable. Your VCs will have their (biased) idea of what’s “standard,” and your startup's lawyers will have their own.

There are ranges of reasonable negotiation on all the material terms in an equity deal, and where any particular deal lands depends on the relative leverage of the parties and their willingness to negotiate.

Landing in one place versus another – such as nuances around voting for Board seats, or stockholder veto rights – can have massive implications for the founding team in terms of long-term voting and economic power.

Punting on those negotiations until after the term sheet is signed means choosing to negotiate once your leverage as a founder has gone down, because you have now agreed to an exclusivity provision that prevents you from pursuing an alternative deal.

This is irrational. Slow down enough, and lengthen the term sheet enough, to ensure there are no surprises on any material economic and power issues post-signing.

A properly negotiated and transparently clear equity term sheet for a Series A or Series B will not be 10 pages long, but it won’t be 1 page either. There are many low-stakes terms that can and should be dealt with after the term sheet is signed.

For anything touching core economics and governance, however, including pre-money valuation and equity pool, treatment of convertible notes and SAFEs, approving an exit, future equity grants and financings, stockholder voting, Board seats, and the ability to recruit future employees and executives, “standard” doesn’t cut it.

Spell out those material details in full. Don't let a VC scare or trick you into rushing the term sheet phase. Waiting until after the term sheet is signed, when you now have nowhere else to go thanks to a no-shop, doesn’t help the founding team at all. It’s exactly what clever VCs want.