Term Sheet Analysis and Founder Advisory

Overview

The term sheet is the document that defines the commercial parameters of an investment relationship for the entirety of the investor's holding period. Founders who sign term sheets without specialist legal review consistently accept terms that constrain their operational freedom, disproportionately protect investor downside at the expense of founder economics, and create governance complications that complicate future fundraising rounds. By the time the long-form investment documents are drafted, the commercial terms in the term sheet are fixed — negotiating at that stage is both more expensive and far less productive than engaging legal counsel before the term sheet is signed. Indian VC term sheets operate within a specific legal framework governed by the Companies Act 2013, SEBI (AIF) Regulations 2012, FEMA and the Foreign Exchange Management (Non-Debt Instruments) Rules 2019 for foreign investors, and the contractual framework of shareholders' agreements. The market terms for Indian Series A and Series B rounds have evolved significantly and differ in material respects from US market practice — both in the legal instruments used (Compulsorily Convertible Preference Shares rather than Preferred Stock, shareholders' agreements rather than certificates of incorporation for investor protections) and in the specific provisions that Indian investors standardly require. Corpus Juris Legal reviews term sheets across every material provision: the valuation and investment structure (pre-money valuation, fully diluted capitalisation, CCPS terms); the liquidation preference mechanics (non-participating vs. participating preferred, liquidation waterfall across multiple investor classes); anti-dilution provisions (broad-based weighted average vs. narrow-based vs. full ratchet) and their economic impact modelled across realistic dilution scenarios; board composition and reserved matters requiring investor consent; information rights and audit rights; drag-along and tag-along obligations; founder lock-in and transfer restrictions; and right of first refusal and co-sale rights. Beyond clause-by-clause analysis, Corpus Juris Legal provides founders with market benchmarking — contextualising each term against the current market standard for the round size and investor profile — and negotiation strategy, identifying which terms are worth negotiating, which are non-negotiable for the investor, and which founder-protective positions can be secured without jeopardising the investment relationship.

Key Service Components

• ◆Valuation and CCPS structure analysis — pre-money valuation, conversion mechanics, and CCPS terms under Companies Act 2013
• ◆Liquidation preference review — participating vs. non-participating preference, waterfall modelling across investor classes
• ◆Anti-dilution provision analysis — broad-based vs. narrow-based vs. full ratchet, economic impact modelling
• ◆Board composition and reserved matters — investor board seat rights, consent items, and operational independence assessment
• ◆Founder lock-in and transfer restrictions — permissible transfers, lock-in period, and FEMA compliance
• ◆Drag-along and tag-along rights — trigger conditions, price mechanics, and founder veto advisory
• ◆ROFR and co-sale rights — right of first refusal and co-sale obligation analysis and negotiation
• ◆Information rights and audit rights — reporting obligations, audit access, and management time impact
• ◆FEMA compliance review — foreign investor term sheet compliance with NDI Rules 2019 and RBI pricing guidelines
• ◆Market benchmarking — current Series A/B Indian VC market terms and negotiation position advisory

Our Approach

Corpus Juris Legal approaches term sheet advisory as the most commercially leveraged intervention in a startup's legal lifecycle. Our partners who advise on term sheets bring experience on both sides of the table — having drafted investor-side documents and advised founder-side clients — which means we know which investor positions are truly non-negotiable and which are opening positions. We provide founders with a clear, jargon-free analysis of what each term means economically, not just legally, and we advise on negotiation strategy with an understanding of the relationship dynamics involved.

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