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By: Maureen Newman, UVC Biomedical Engineering Community Connector
Its your first startup and you get a hint of attention from your first VC. So you hire an attorney and wrote a full-blown Private Placement Memorandum, only to end the day without any funding. Wait—what happened? According to Rami Katz, Chief Operating Officer at Excell Partners, your expectations for funding may not have been oriented with what your VC had to offer. “Many people fail to get funding because they do not understand what they are asking for,” said Katz. “They have not done their homework to know if a VC would actually invest in their company.”
The better approach, according to Katz, is to write a Term Sheet–an executive summary that boils a 60-page investment document down to three or four pages. “It is a way to deal with the imperfect VC market,” he says. “How can you compare a software company to a medical device company? Send around a term sheet to see the VC’s response to the terms of the agreement.”
Katz has met with hundreds of entrepreneurs during his years as an investor in Upstate NY and he is on a mission to educate first time founders. That is why, on February 10th, Katz will be moderating an Upstate Venture Association of New York (UVANY) forum titled “Understanding Early Stage Term Sheets (or, Term Sheets for Dummies).” Sharing the stage with Katz will be Steven Gersz, Partner at Underberg & Kessler, and Jeremy Wolk, Counsel at Nixon Peabody. Together, they will walk the audience through the basic components of term sheets. “People with no experience with term sheets end up negotiating standards that cannot be negotiated away,” said Katz. “This forum will discuss the key issues to streamline and understand term sheets in a practical way.”
By the end of the session, you will be armed with practical tools to assess and understand term sheets. Be sure to register for the event, which runs from 5:00 to 8:00 pm at Eastman Business Park.