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Comment by jamornh | Hacker News Reader

In that case, what would be the key difference between a clean term vs a messy one? How would a first time founder tell the difference?

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> In that case, what would be the key difference between a clean term vs a messy one?

In my experience, terms with lots of if-then conditionals are the most common flag. The last "messy" term sheet I saw had an unusually long diligence period. Predictably, the investor "found" a bunch of problems at the 11th hour and pulled out, leaving the startup in a financial lurch.

Anything that differs from standard docs should be _highly_ suspect, assuming you can get ahold of some.

As a lower bound, I've never seen terms presented on Shark Tank that weren't off-the-wall insane. :D

> How would a first time founder tell the difference?

By talking to other founders, advisors, and their attorneys. This book was useful when I was approaching the first term sheets I ever saw: http://www.amazon.com/Term-Sheets-Valuations-Intricacies-Big...

>By talking to other founders, advisors, and their attorneys.

I 100% agree with you (and I have such contacts to help me out), but I lament the fact that many founders will lack such contacts to give them a sanity check. Perhaps one can reach out to people about it, but without a preexisting network to tap, I am afraid that many will simply accept the bogus terms rather than deal with the discomfort of reaching out for help.

A simple analog for first time founders is standard docs (series AA & SAFE) vs non standard docs.

As an aside, I think it's really hard to get clean terms when you're outside silicon valley... I had a friend raise money in Utah recently and he was saddled with all sorts of strangeness. (board for a $200k seed investment, etc.)

Another startup hub advantage.

Thank you, yes that's a great first filter (standard vs non-standard docs.) Though, as you said, unfortunately it's rare for terms outside the valley to be standard so that might not be as helpful a criteria for founders outside the Valley, and especially for us here in Asia.

As an aside, I think it's really hard to get clean terms when you're outside silicon valley

Which is the whole point. I was told point blank by Cooley that no one outside of the valley will ever do SAFE because it is different.

They also will never do post money options pools which are what YC seems to push for.

So good luck everyone else (myself included).

Not true. I did a Safe earlier this year with a VC firm in the midwest. Yes, I had to be firm about it but all sides were really happy with it. Things are changing.

That's awesome and congrats, but my guess is you are an outlier and probably have some significant leverage in your market.

Perhaps then we just need more companies gaining traction? Then it's not so much an issue of funding environment but a relative lack of strong startups.

SAFE may be met with more resistance outside SV but it's certainly not a deal breaker. Sibling cites a midwest firm that agreed to it, and I know one in East Asia that agreed to it.

I've heard that from friends raising outside Silicon Valley, Seattle, and NYC, too. "Shark Tank" terms, so to speak.

I raised a clean $1M with a YC Safe note from a firm in Fargo, ND of all places. Took less than a month from initial meeting to cash in the bank. Times have changed.

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