Term sheets are power maps
A term sheet is not merely an agreement to invest. It is a map of future economics, rights, governance and decision-making. The clauses inside it determine who gets paid first, who can block decisions, how dilution is handled and how future rounds may work.
Economic clauses
Founders should understand valuation, investment amount, security type, liquidation preference, participation rights, anti-dilution, dividend rights, conversion, option-pool treatment and founder vesting. These clauses shape exit proceeds and future ownership.
Control clauses
Board composition, protective provisions, reserved matters, information rights, inspection rights, ROFR, co-sale, drag-along, tag-along and veto rights can materially affect founder flexibility. They may be reasonable, but they should not be accepted blindly.
Future-round impact
Some terms that look acceptable in isolation can worry the next investor. Over-complex rights, unclear convertibles, excessive control or messy advisor equity may slow diligence or reduce negotiating leverage in the next round.
XITIJ advisory stance
XITIJ does not replace legal counsel, but helps founders understand commercial implications, negotiation priorities and future-round consequences before they sign.
This article is for informational purposes only. It is not investment, legal, tax, accounting or financial advice. Any advisory engagement with XITIJ requires separate written agreement.