Trendsetter Term Sheet Comparison

What are the things affecting my economics & control

Term Alpha Better/Worse; Mega

Entrepreneur’s
(Brief one- or two-line perspective (Brief one- or two-line
description or number) (Use >,<, =) description or number)

1A Investing: 5M Investing: 5M
Idea Worth: 7.35M Idea Worth: 7M
__ __
Total: 12.35M Total: 12M

Total Shares = Total Shares = 12M/1

12.35M/1.05 PPS PPS
= 11.76 = 12

VC Ownership = VC Ownership =
5M / 1.04 shares = 5M / 1 shares = 5M
4.76M shares shares (41.7%) –
(40.5%) – Preferred Preferred Shares
Shares
Leftover for the
Leftover for the Founders = (37.5%)
Founders = (34%) – – Common Shares
Common Shares
Pool = (20.8%) –
Pool = (34%) – Common Shares
Common Shares

1B Investing: 5M
Idea Worth: 6.65M
__
Total: 11.65M

Total Shares =
11.65M/0.95 PPS
= 12.263

VC Ownership =
5M / 0.95 shares =
5.26M shares
(42.9%) – Preferred
Shares

Leftover for the

Founders = 4M
(32.6%) – Common
Shares
 Pool = 3M (24.5%) –
Common Shares

Amount of Investment $5,000,000 = $5,000,000

Pre-$ Valuation $7,350,000 (if they > Pre-$ valuation = new

reach their milestone share price x old shares
outstanding
of $500k in revenue, $1*7,000,000 = $7,000,00
otherwise they get
those shares)

Employee Pool (shares) 3,000,000 shares < 2,500,000 shares

The pool is taken out of the
common – create a “Equity
Budget” for budget the equity
for each employee

Escrow 501,253 shares > 929,889 shares

the lock box of share
(the dominos of Hurdle rate)
Issue Price $1.05 > $1

Dividend Noncumulative > Cumulative (10%)

($0.08)
Number of Investors 3 < 1
(careful with “may other”
investors)
Liquidation Preference Initial pay issuance > 1.25X + dividends +
(either get the preference, or price + dividends remaining by
the ownership 40% of (preferred) ownership
$100M) (participating)

(Participation: always getting

1.5X, as it’s not capped)
Conversion 1:1 > Purchase price /
conversion price
Automatic conversion Share price > $5, > Share price > $20,
offering > offering >
$15,000,000 $25,000,000
Type of Security to be
Issued
Redemption rights - > Yes
Antidilution Weighted average > Weighted average,
can go full ratchet
when share price <=
50% of purchase
price
Voting Rights >60% of series A > Each one votes
preferred
Reps and Warranties Standard = Standard
Nondisclosure Yes = Yes
Right of First Refusal Pro rata right < -
Co-Sale Rights Pro rata basis = Base on ownership%
Information Rights Hold 250,000 shares > Any series A investor
Board 5 = 5
Compensation Committee 3
Counsel and Expenses Company pays < Company pays
$20,000 less + $20,000 less
disbursement
Indemnification Fullest extent
Registration Rights - = -
Founder’s Vesting Vest 25% on = Vest 25% on closing,
purchase, remaining remaining vest over
vest over 36 months 36 months
Founder’s Acceleration Accelerated vesting > N/A
Termination Six months’ salary in > -
termination w/o
cause