It depends who is selling and who is buying.

In the old days, term sheets only came from VCs. Founders were almost always selling. Well, almost always.

But even in the Old Days, the hottest of start-ups made up the terms. Microsoft took one venture investor, sold them only them 5%, and named the terms: The Venture Capitalist Microsoft Allowed To Invest Early

Today, it’s still the case. In almost all “standard” VC financings, the VC drafts and issues a fairly standard term sheet.

But if you are very hot, it’s different. At the seed stage, for example, Ycombinator SAFE notes have evolved into a form of term sheet issued by founders. Originally, SAFEs were designed to save legal fees. But today, what they really serve as is a very simple, founder-friendly, founder-generated term sheet. The valuation is set by the founders, and the terms are the SAFE itself — again set by the founders, in essence.

In any stage of investing, if you get 4–5+ offers and demand for every 1 share available, the founders will set the terms, even if they don’t literally issue the term sheet.

But if you aren’t super hot — let the VCs take the lead there. It’s their money, and you are the one selling.

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