Foundations of Term Sheets and Cap Tables in Venture Deals

Most founders and early employees encounter a term sheet for the first time under pressure: a deal is moving fast, a lawyer is standing by, and the document is dense with unfamiliar clauses. Without a solid mental model, it is easy to accept terms that look standard but carry long-term consequences for control, economics, and future fundraising rounds. By the end of this course you will be able to read a venture term sheet from first principles, identify the clauses that most affect founder dilution and investor rights, construct a basic capitalization table that correctly reflects pre- and post-money ownership, and explain how common provisions such as liquidation preferences, anti-dilution adjustments, and pro-rata rights interact across multiple funding rounds. What you will learn: - The anatomy of a term sheet: economic terms versus control terms and why each matters - How pre-money and post-money valuation determine founder dilution at each round - Constructing and reading a capitalization table for a seed-stage and a Series A company - Liquidation preferences — participating versus non-participating — and their effect on founder proceeds - Anti-dilution provisions: broad-based weighted average versus full ratchet - Option pool mechanics: why the option pool shuffle affects founder ownership before money arrives - Shareholder rights: drag-along, co-sale, and information rights explained in plain language - How a down round changes the cap table and which protections kick in This course is built around annotated term sheet excerpts, worked cap-table calculations using spreadsheet templates, and case studies drawn from representative early-stage deals. Each section opens with a short reading that explains the concept, followed by a reflection prompt that asks you to apply the concept to a fictional startup scenario. Worksheets guide you through building a cap table step by step, adding investors at each hypothetical round and recalculating ownership percentages. This course is designed for founders, startup employees receiving equity compensation, angel investors, and business-school students who are new to venture financing. No prior legal or accounting background is required. This course is informational and educational; it does not constitute legal or financial advice, and readers should consult qualified legal counsel before signing any investment documents.