But now they’re really going to be angry – the site is encouraging users to upload term sheets so that people can compare and contrast individual terms from each VC.
Venture capitalists have a lot of leverage negotiating terms that help them increase ROI simply because they have a firm grasp of the market. Things like liquidity preference (how much money they get out before the founders in a sale), veto rights and other preferred stock privileges can affect the long term economics of a deal substantially.
Entrepreneurs generally rely on their attorney and contacts to help them understand the current trends in terms. Now, though, TheFunded will help them by supplying even more information. Entrepreneurs will love this. VCs, not so much.
One catch, though. Entrepreneurs must upload their own term sheets before they can view others. The goal is to encourage participation, not just data downloads.
TheFunded was run anonymously until Adeo Ressi announced that he was behind it in November.