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Term Sheet Review

Term sheet review for Indian founders. Economic implications of every material clause, red flag identification, cap table modelling under different exit scenarios, and 2026 market-standard comparison. CA team reads the economics; strategic legal advisers on the team handle clause interpretation. Final legal drafting and redlining stay with your law firm; we work alongside, not in their place.

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The Review Workflow.

Four sequential stages from receipt to counter-position. Typical timeline: 5-10 working days for a Series A term sheet, faster for SAFE or convertible note (1-3 days). Exclusivity windows are usually 60 days; we work within yours. First read inside 24-48 hours of receipt so you have an early view of major issues.

Stage 1
First read & triage
Within 24-48 hours of receipt: full read of the term sheet, summary of headline economic terms (valuation, raise size, ESOP, liquidation preference), and an initial flag of any deal-breakers or unusual terms. You get a first opinion fast so the rest of the negotiation timeline is yours, not lost to our review window.
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Stage 2
Economic modelling
Cap table modelled under the proposed term sheet: post-money waterfall, dilution at exit across multiple exit-value scenarios ($50M / $100M / $250M / $500M), founder payout after liquidation preference and option pool reload, impact of anti-dilution in a down round. The numbers founders rarely model themselves; the most important diligence the founder can do on the deal.
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Stage 3
Red flag review + market comparison
Clause-by-clause review against 2026 Indian market norms: liquidation preference (98% of 2025 rounds are 1x non-participating), anti-dilution (broad-based weighted average is standard), option pool location (pre vs post-money), founder vesting, board composition, protective provisions, drag / tag / ROFR. Each clause rated: market-standard, founder-friendly, investor-leaning, or red flag.
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Stage 4
Counter-position brief & lawyer handoff
Written brief for your law firm and you: each material clause with our position (accept, push back, hard reject), suggested counter-language (drafted with our strategic legal advisers, finalised by your lawyer), and the negotiation priority order. The lawyer takes this into the actual redline cycle; we stay available for further economic modelling as terms move during negotiation.
↺ One-time per term sheet. Founders raising parallel rounds with multiple investors can engage for term sheet comparison (one engagement covering 2-3 investor offers). Re-engagement at the next round, the cap table modelling layer is different at each stage; Series A is not Series B.

What Is Term Sheet Review?

A term sheet is the document an investor sends after the second or third pitch meeting, summarising the proposed terms of the investment: valuation, raise amount, liquidation preference, anti-dilution, board composition, founder vesting, protective provisions, drag-along, ROFR, and a long list of other clauses. It is mostly non-binding (except for exclusivity and confidentiality), but it sets the architecture of the eventual Shareholders' Agreement and Share Subscription Agreement that founders sign at closing. The clauses that look standard in the term sheet survive into the binding contracts almost verbatim. What you accept here, you live with.

Most first-time Indian founders sign term sheets without fully understanding the economic math behind specific clauses: how a 2x participating liquidation preference reduces founder payout at a $50M exit, how full-ratchet anti-dilution erases founder ownership in a down round, how option pool size in pre-money silently transfers 5-10% dilution onto founders. The clauses are written in legal language but the consequences are arithmetic. This page is about getting the math right before you sign.

Our scope, and where your lawyer comes in

We are CAs, not a law firm. The work we do on term sheets is real and well-suited to our scope, but it does not replace legal review. Specifically:

What we do: read every clause for economic implications, model your post-money cap table and exit waterfall under the proposed terms, compare each clause to 2026 Indian market norms, identify red flags (participating preferred, full ratchet, founder vesting reset, drag below 75%, excessive protective provisions), prepare a counter-position brief with prioritised negotiation asks, model FEMA / Section 56 / tax implications of secondary sales or special terms, coordinate with strategic legal advisers on the team for clause-interpretation questions, and stay available through the negotiation as economic terms move.

What your law firm does: legal drafting, redline cycle, final clause-by-clause negotiation language with investor counsel, signature, definitive agreement drafting (SHA, SSA), legal opinions, indemnity and reps and warranties drafting. We work alongside your lawyer, not in their place; founders who engage us bring our brief into their lawyer's redline cycle as input, not output. If you do not have a lawyer, engage one before the term sheet stage, we are happy to recommend founder-side firms.

The 2026 Indian market is well-defined

The good news for founders: most material clauses have settled into market norms in 2026. 98% of 2025 venture rounds globally reverted to 1x non-participating liquidation preference (Cooley data); the Indian market follows the same convention for seed and Series A. Broad-based weighted average anti-dilution is the founder-friendly norm. Drag-along threshold at 75% of shareholders is the negotiated standard. Founder vesting at 4 years with 1-year cliff, with credit for time already served, is conventional. Outliers stand out, and a term sheet that diverges from these on multiple clauses signals either an aggressive investor or a special-situation deal. Both are negotiable.

India-specific terms in 2026

Several India-specific clauses now appear in standard term sheets. Press Note 3 reps: foreign investors from countries sharing a land border with India (China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, Afghanistan) trigger DPIIT prior approval requirements; investors will want reps confirming Press Note 3 compliance. Reverse-flip / redomicile reps: post the PhonePe and Razorpay redomiciles, investors increasingly ask for reps that the company will not flip the parent overseas without consent. FEMA pricing compliance language for any foreign-investor put options. Arbitration seat: Mumbai MCIA is conventional for domestic; SIAC Singapore for cross-border. Founder personal indemnity: 25-30% of investment cap, 18-24 month survival, sometimes contested.

What's in scope and what's not

This page covers term sheet review with economic and structural analysis: clause-by-clause review, cap table modelling, red flag identification, counter-position briefing, coordination with your law firm. Not covered here: full SHA / SSA drafting and redlining (your law firm); litigation arising from term sheet disputes (litigation counsel); tax planning around secondary sales at scale (separate engagement, integrated where relevant); cross-border structuring for the parent entity itself (we coordinate with a specialist firm). For SAFE and convertible note interpretation (less complex than priced rounds), see SAFE & Convertible Notes. For ongoing cap table maintenance through the round, see Cap Table Management.

What Gets Done Each Cycle.

Six clause categories that determine founder outcomes. Most material economically; most negotiable in practice. Each gets clause-by-clause review against 2026 Indian market norms.

Liquidation preference
Exit math
Order of payout at exit. 1x non-participating is the 2026 market norm (Cooley data: 98% of Q2 2025 rounds). Participating preferred means the investor “double dips”, takes the preference AND shares the remainder; can leave founders with materially less in $50-100M exits. Multiples above 1x are aggressive; 2x non-participating creeps in at later growth stages.
Anti-dilution
Down-round math
What happens if the next round is at a lower valuation. Broad-based weighted average is the founder-friendly market norm: investor share count adjusts modestly. Narrow-based is more aggressive. Full ratchet is predatory, investor gets repriced as if they invested at the down-round price, can erase founder ownership entirely. Red flag at seed or Series A.
Option pool & dilution math
Pre vs post-money
Where the new / topped-up ESOP pool sits in the cap table. Option pool in pre-money means founders absorb the dilution entirely; in post-money, all shareholders share it. The default term sheet position is pre-money, the negotiated position is post-money. Material: 5-10% additional founder dilution silently transferred if not negotiated.
Founder vesting & control
Founder side
4 years, 1-year cliff is conventional. Key negotiation points: credit for time already served (push for retroactive vesting if founders have been building 2+ years pre-Series A), good leaver / bad leaver definitions, acceleration on change of control (single vs double trigger). Vesting reset on new investment is a red flag.
Board & protective provisions
Control side
Board composition: balanced or founder-friendly until growth stage. Investor-majority boards from seed signal trouble. Protective provisions (investor veto rights): standard for existential matters (new shares, M&A, change of business, budget over thresholds). Overreach: routine hiring, pricing, product decisions. Negotiate materiality thresholds on every veto.
Drag, tag, ROFR & transfer rights
Exit dynamics
Drag-along at 75% threshold is the founder-friendly standard; below 75% (especially 50%-51%) lets investors force exits founders don't want. Tag-along: full pro-rata is standard. ROFR / ROFO: should be symmetric (both sides), not just on founder shares. Indian-specific: FEMA pricing language on put options; Press Note 3 reps; reverse-flip restrictions.

When You Need Us to Handle This.

Term sheet review is high-leverage work. A 5-10 day engagement materially changes founder outcomes at exit. Here's when professional handling pays for itself many times over.

Get help if
  • You're a first-time founder seeing a Series A term sheet. First institutional term sheets are dense, written in legalese, and architecturally identical to the binding documents you sign at closing. First-time founders consistently underweight specific clauses (option pool location, drag threshold, vesting reset) that materially affect outcomes years later. The cost of getting this wrong is measured at exit, not at closing.
  • You have multiple term sheets and need a comparison framework. Term sheets from competing investors look superficially similar but differ in 5-15 material ways: liquidation preference structure, anti-dilution mechanic, board composition, protective provisions scope, vesting credit, ESOP location. Side-by-side comparison surfaces which sheet is genuinely better, not just which has the higher valuation headline.
  • The term sheet has terms that look unusual or aggressive. Participating preferred above 1x, full-ratchet anti-dilution, founder vesting reset, drag-along below 75%, broad protective provisions, asymmetric ROFR, MFN clauses for downstream rounds, these are negotiable but require an informed counter-position. The investor will not volunteer that their first draft is aggressive; you need a comparison reference.
  • You want to model post-money cap table and exit math. Most term sheets affect outcomes at exit, not at closing. A 2x participating preferred vs 1x non-participating is the difference between $20M and $35M of founder payout at a $100M exit, on the same headline valuation. Founders rarely model these scenarios themselves; the math is straightforward but tedious, and the implications are material.
  • You have a lawyer but want a CA-side economic check too. Law firms read term sheets for legal correctness and conventional position; they sometimes do not model the economic implications across exit scenarios with the same rigour. Engaging us alongside your lawyer gives you legal and economic views as separate inputs into your decision, not bundled.
Consider DIY if
  • You're a repeat founder raising your third or fourth round. Experienced founders who have negotiated multiple term sheets, work routinely with experienced counsel, and have built their own cap table modelling capability can self-review with light lawyer support. The cap table modelling layer is the work most repeat founders still find useful to outsource.
  • You have a strong founder-side law firm engaged early. Top-tier founder-side firms (Khaitan, Trilegal, Cyril Amarchand, JSA, Indus Law on the founder side) handle term sheet review including economic implications competently. If you are paying for this scope already, an additional CA review is duplicative; we are most useful as a supplement, not a substitute.
  • The term sheet is a standard SAFE or convertible note. SAFEs and convertible notes have fewer negotiable terms than priced rounds. Self-review with light lawyer support is usually fine. See SAFE & Convertible Notes for our scope there; the engagement model is lighter than a Series A review.
  • You're raising small angel cheques with familiar investors. Angel rounds with founder-friendly investors who use standard documents (Y Combinator SAFE, Indian Angel Network template, sector-friendly investor templates) typically do not need professional term sheet review. The terms are largely standardised and the investors are typically not in a position to dictate aggressive clauses.

How We Work.

Six commitments. CA team reads economics; strategic legal advisers handle clause interpretation. Final legal drafting and redlining stay with your law firm; we work alongside, not in their place. Fast turnaround inside your exclusivity window.

NDA before term sheet shared
Non-disclosure agreement signed before you share the term sheet, financials, or investor identity. NDA binds everyone on the engagement, including any strategic legal adviser brought in for clause interpretation. The term sheet itself, your numbers, and the investor stay confidential to the engagement.
First read in 24-48 hrs, full review 5-10 days
Within 24-48 hours of receipt: first read with summary of headline terms and major-issue flag. Full review with economic modelling, market comparison, and counter-position brief: 5-10 working days for Series A, 1-3 days for standard SAFE or convertible. Faster turnaround possible for urgent exclusivity windows with explicit scope trade-offs.
Cap table modelled at multiple exit values
Post-money cap table modelled under the proposed terms; founder payout calculated at exit values of $50M, $100M, $250M, $500M (or sector-appropriate range). Impact of liquidation preference, anti-dilution, option pool, and dilution stacked. The economic implications visible as numbers, not legal text.
Each clause rated against 2026 market norms
Every material clause rated: market-standard, founder-friendly, investor-leaning, or red flag, with the reference data behind the rating (Cooley 2025 data, Indian-specific norms, sector adjustments). Founders see the comparison, not just our opinion. Useful in negotiation: investors push back differently when shown market data.
Honest line between CA scope and lawyer scope
We do not draft redlines. We do not advise on contract interpretation in disputes. We do not appear in negotiations as your legal representative. That is your law firm's work and we stay on our side of the line. Counter-position briefs are inputs into your lawyer's redline cycle, not substitutes for it.
Available through the negotiation, not just the review
Term sheets move during negotiation. Revised drafts, counter-counters, last-minute clauses, all need fresh economic modelling. We stay available through the round (typically 4-8 weeks from term sheet to signed SHA), updating cap table math and red flag flags as terms evolve. Direct line, not a ticketing system.

Where Term Sheets Hurt Founders.

Specific clauses that look benign in the term sheet but cost founders materially at exit or in a down round. The negotiable ones, marked. The honest catalogue.

Risk if unregistered
Likelihood
Commercial impact
Option pool sized in pre-money
5-10% silent dilution to founders
Negotiate to post-money pool, or size pool tight to actual hiring plan with top-up at next round
Participating liquidation preference
15-30% founder payout erosion at exit
Push to 1x non-participating (2025 market norm: 98% of Cooley deals); negotiate cap if participating is accepted
Full-ratchet anti-dilution
Down-round annihilation
Push to broad-based weighted average; full ratchet is predatory at seed or Series A, only common in distressed deals
Drag-along threshold below 75%
Forced exit risk
Negotiate 75% threshold; below 75% lets investors drag founders into exits at price-points founders would reject
Founder vesting reset on new investment
Clock restart on existing equity
Push for credit for time already served; particularly important if founders have built 2+ years pre-Series A
Pay-to-play in protective provisions
Forced pro-rata or loss of preference
Negotiate carve-out: existing investors don't lose rights if they cannot participate pro-rata in a future round
Excessive protective provisions (control via veto)
Operational paralysis
Negotiate materiality thresholds on every veto; restrict to existential matters (M&A, new shares, change of business)
Asymmetric ROFR / transfer restrictions
Founder locked, investor mobile
Symmetric ROFR / ROFO terms; transfer restrictions should apply equally to both sides, not just founder shares
Term sheet clauses are negotiable, especially before exclusivity engagement. Each row above is a 10-30 minute conversation with the investor that materially changes founder economics over the life of the company. The term sheet draft is the investor's opening position; founders who treat it as final pay for it at exit. Push back informed; concede informed.

Frequently Asked Questions.

No, we are CAs, not a law firm. We do not draft contracts, do not redline term sheets, do not appear as your legal representative in negotiations, and do not advise on contract interpretation in disputes. That is your law firm's work and we stay on our side of the line. What we do: read every clause for economic implications, model cap table outcomes, compare to 2026 market norms, identify red flags, and prepare a counter-position brief as input into your lawyer's redline cycle. If you do not have a lawyer, engage one before the term sheet stage, we can recommend founder-side firms.
Economic implications of every material clause (liquidation preference math, anti-dilution mechanics, option pool location). Cap table modelling at multiple exit values to show what each clause is worth in dollars. Market comparison: each clause rated against 2026 Indian and global venture norms. Red flag identification: clauses that look benign but cost founders materially (full ratchet, participating preferred above 1x, drag below 75%, vesting reset). Counter-position briefing: prioritised list of negotiation asks with suggested counter-language for your lawyer to refine. Coordination with strategic legal advisers on the team for clause-interpretation questions.
First read in 24-48 hours of receipt: headline term summary and major-issue flag. Full review in 5-10 working days for a Series A term sheet: economic modelling, market comparison, red flag analysis, counter-position brief. SAFE or convertible note: 1-3 working days, simpler economic structure. We work inside your exclusivity window (typically 60 days), with fast turnaround so the negotiation timeline is yours, not lost to our review.
Pricing depends on: (1) complexity of the term sheet (Series A more involved than SAFE; secondary or down-round more involved than primary); (2) scope (single term sheet vs multi-investor comparison); (3) turnaround (standard 5-10 days vs expedited); (4) ongoing support through the negotiation (term sheets evolve; fresh modelling needed at each iteration). We quote a fixed engagement fee once scope is clear. Reach out for a specific quote.
Yes, common ask. Term sheets from competing investors look superficially similar but differ in 5-15 material clauses. We build a comparison matrix: liquidation preference structure, anti-dilution mechanic, option pool location, board composition, protective provisions scope, vesting terms, drag / tag / ROFR positions, info rights. Side-by-side rating against market norms. The exercise often reveals that the headline-higher-valuation offer is materially worse on overall economics; or that the cleaner sheet is preferable even at a slight valuation discount.
(1) Accepting option pool in pre-money without negotiation, founders absorb 5-10% additional dilution silently; should be post-money or pool sized tight to actual hiring plan. (2) Not modelling exit economics under proposed liquidation preference, a 2x participating preferred vs 1x non-participating is often a 15-30% swing in founder payout at moderate exits. (3) Overlooking founder vesting reset, the clock restarts on existing equity, particularly painful if founders have been building 2+ years pre-Series A. All three are negotiable at the term sheet stage; all three become much harder to fix later.
Liquidation preference: 1x non-participating (98% of 2025 Cooley deals). Anti-dilution: broad-based weighted average. Option pool: 10-15%, negotiable on pre vs post-money. Founder vesting: 4 years, 1-year cliff, credit for time served typically negotiable. Board: 5 seats common (2 founder, 2 investor, 1 independent), or 3-seat boards (1 founder, 1 investor, 1 independent). Drag-along: 75% threshold. Tag-along: full pro-rata. Protective provisions: limited to existential matters with materiality thresholds. Exclusivity: 60 days + 15-day mutual extension. Founder indemnity: 25-30% cap, 18-24 month survival.
Yes, lighter scope, faster turnaround. SAFEs and convertible notes have fewer negotiable terms than priced rounds, the main variables are valuation cap, discount rate, conversion mechanics, MFN provisions, and (for convertibles) interest + maturity. We model conversion outcomes at next round, flag any unusual terms, and brief you on the implications. Standard SAFE review: 1-3 working days. See SAFE & Convertible Notes for our dedicated scope.
On economic / cap table questions, yes. If the investor or their lawyer wants to discuss the cap table math, exit modelling, or financial implications of specific clauses, we attend and respond. On legal interpretation calls, no, that is your lawyer's role. Coordination of who joins which call happens upfront; we are explicit about scope so calls are productive.
We can give you the analysis; the decision is yours. We provide: economic modelling under proposed terms, comparison to alternative investors' offers (if you have them), red flag analysis with severity, and our honest assessment of whether the terms are workable vs problematic. Many founders find this clarifies the decision quickly; some delay signing while we propose specific counter-positions. We do not take a position on the founder's strategic question of whether to accept the investor, just on whether the terms as drafted are economically and structurally sound.
Useful but more limited. Signed term sheets are largely binding on the parties to negotiate in good faith toward the definitive documents at the same headline terms. We can still: model the cap table economics so you understand what you signed, identify red flags that may still be negotiable in the SHA / SSA drafting cycle (some are; some are not), and brief your lawyer on priorities for the redline negotiation. Pre-signature engagement is materially better; post-signature engagement is a recovery exercise.
Yes, on request. We have working relationships with several founder-side firms across stages: boutique fundraising-focused firms (good for seed / Series A, faster and cheaper), and full-service firms (Khaitan, Trilegal, Cyril Amarchand, JSA, Indus Law) for Series B and beyond where M&A and exit support matter. The fit depends on round size, sector, and ongoing relationship needs. We make introductions; we do not take referral fees, the recommendation is based on fit, not commercial interest.

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Read Your Term Sheet.

CA team + strategic legal advisers reading every clause for economic and structural implications. First read in 24-48 hours; full review in 5-10 days. Your law firm handles drafting and redlining; we work alongside. Talk to a CA in 15 minutes.