Is this legal advice?

No. It helps you prepare for the lawyer, not replace one.

What if the term sheet uses a SAFE?

SAFEs have fewer terms. Use the SAFE walkthrough and the stacked SAFE calculator instead.

Does it cover Series A?

The same terms apply; Series A sheets have more of them. The NVCA model term sheet is the reference.

Term Sheet Red-Flag Checker: 18 Terms to Watch For

Tick every term that appears in your term sheet. Severity is weighted: the score shows how far the sheet sits from the seed-stage standard.

Liquidation preference above 1xInvestors get 2x or 3x their money before anyone else; at modest exits founders get little.SevereParticipating preferred without a capInvestors take their preference and then share again as if they had converted.SevereFull ratchet anti-dilutionIn a down round their shares reprice to the new price and founders absorb everything.SevereInvestor majority on the boardInvestors can replace the CEO or block decisions with their own votes.SeverePersonal guarantees or founder indemnitiesEquity investors should not have recourse to your house.SevereOption pool above 15% created pre-money, no hiring planA pool larger than the plan is a hidden valuation cut.SignificantSuper pro-rata rightsLets this investor take more than their share next round and crowd out a new lead.SignificantRedemption rightsInvestors can demand their money back after a few years, which can bankrupt a company.SignificantFounder vesting reset with no credit for time servedTwo years of work count for nothing if you leave or are pushed out.SignificantWarrants or extra equity on top of the roundHidden dilution that changes the real price per share.SignificantCumulative dividends on preferredInterest-like accrual that grows the preference every year.SignificantDrag-along that investors can trigger aloneA minority could force a sale over the founders’ objection.SignificantProtective provisions over hiring, budget or small contractsInvestor vetoes on routine decisions slow the company down.SignificantFees charged to the company above a capLegal fees without a cap, monitoring or management fees eat the round.SignificantNo-shop longer than 45 daysA long exclusivity period gives them time and takes away your options.MinorRight of first refusal to lead future roundsDiscourages other investors from spending time on you.MinorPay-to-play clauseInvestors who do not join future rounds lose preferences; can be founder-friendly, but check who it binds.MinorInformation rights beyond quarterly reportingWeekly access or data room access for a competitor’s portfolio is a burden and a risk.Minor

0/100 risk

Standard

Close to the seed-stage standard. Negotiate the details, not the structure.

How to verify

Compare against a public standard: the YC post-money SAFE or the NVCA model term sheet.
Ask the investor which terms they have waived in other seed deals.
Get a lawyer who closes venture rounds regularly, not a general counsel.

Start free, no card needed

Not legal advice. Use it to prepare the conversation with your lawyer.

Term sheet red-flag checker: what is standard, and what is not

What a standard seed term sheet looks like

The terms that cost the most

How to negotiate

Red flags vs deal breakers

Questions founders ask

Is this legal advice?

What if the term sheet uses a SAFE?

Does it cover Series A?

More tools for this stage

Due Diligence Checklist

Exit Waterfall Simulator

Term Sheet Game

Valuation Trap Simulator

Founder Exit Returns

Investment Agreement Walkthrough

Prepared for the meeting? Bring the report investors ask for.