YC Series A Term Sheet Template
A standard and clean Series A term sheet is one of the most important documents you'll encounter as a founder. Yet many founders see their first term sheet without understanding what "good" looks like—a significant disadvantage when VCs review them regularly and know what to expect.
YC has invested in hundreds of founders and reviewed countless Series A term sheets. Below is what a Series A term sheet looks like with standard and clean terms from a good Silicon Valley VC, along with guidance on what to watch for.
Understanding the Template
In this template, bracketed items (besides company and lead investor names) are always or frequently negotiated. Items not in brackets are sometimes negotiated, but typically relate to idiosyncratic company features rather than terms parties intend to heavily bargain over.
One notable omission is standard pricing. While Series A leads generally want 20% of the company, pricing flexes based on leverage held by each side. YC is more concerned with control and structural terms that are less familiar to founders and therefore more prone to confusion and trouble.
It may be surprising to see everything covered in a single page. This became common over the last decade as some investors shortened legalese to signal: "We aren't going to get bogged down in the minutiae. We're going to make this easy, friendly, standard and fast."
What Your Term Sheet Says About Your Investor
A contract allocates risks between parties, so the terms an investor insists on can reveal a lot about their perceived risks. These show up in two main ways.
Control Terms
Control issues go beyond standard investor vetoes in the "Voting Rights" section. They relate to board composition and the investor's ability to block or dictate operational decisions.
The template's board structure is founder-friendly because founders retain board control 2-1. Founders most often lose control at Series A with a 2-2-1 board structure (2 founders, 2 investors, 1 independent board member). This is significant because it means founders can be fired from their own company.
Another way founders lose control is through a separate provision requiring investor director approval for operational decisions like setting annual budgets, hiring/firing executives, pivoting the business, or adding new lines of business.
When investors structure boards to take power from founders, they often justify it with governance or accountability concerns. But the more power taken away, the clearer it becomes that the investor is attempting to structure away a perceived risk. When an investor says they're committed to partnering long-term but insists on terms that say otherwise, believe the terms.
Economic Terms
The template is instructive not for what it contains but what it doesn't. Non-standard or "dirty" economic terms include:
- Liquidation preference greater than 1x — the investor gets back more than invested capital first
- Participating preferred — the investor double-dips by getting money back plus pro rata exit proceeds
- Cumulative dividends — the investor compounds liquidation preference annually, increasing the economic hurdle before founders and employees see value
- Warrant coverage — the investor gets extra fully diluted ownership without paying for it at the agreed valuation
These terms reduce typical venture risk by boosting downside economics or juicing upside outcomes. They signal: "I'm sort of afraid of losing my money." They can also foreshadow behavior when things aren't going well—pushing you to sell when you don't want to, or dialing back risk when it's important to take it.
Good investors address economic risks by negotiating valuation and give standard terms because they know real venture money is made by building long-term value, not structure.
Building a Foundation for Future Rounds
Your Series A documents are a foundation and precedent for future rounds. Clean foundations make the next term sheet and financing round fast and simple, as future investors step into the same straightforward terms. The opposite complicates future fundraises: future investors ask for structure-heavy terms, existing investors refuse to drop terms that subsequent investors want removed, and unwinding bad terms becomes difficult or impossible.
The goal is to get a clean deal, not to cycle endlessly for a perfect one. No one ever built an enduring company just by winning their Series A negotiation. Even if you can't get everything right, you always have the power to execute. If you do that, the value you build can outrun suboptimal terms or establish leverage to renegotiate later. Close fast and get back to work.