The typical early stage company option pool ends up in a range of 10% to 20%, with later stage companies having smaller option pools.

For many investors, what distinguishes a company from its competitors as a compelling investment opportunity is the value of its intellectual property (IP). While some entrepreneurs and investors think the phrase “intellectual property” refers to patents, we are referring to patents, copyrights (to the code), trademarks (of the brand), and trade se

Finally, we don’t believe in ranges in the fundraising process. When someone says they are raising $5 million to $7 million, our first question is: “Is it $5 million or $7 million?

Don’t put yourself in a position where you can be held hostage by angels. They are important, but they are rarely in a position to determine the company’s direction. If your angel group is a small, diffuse list of friends and family, consider setting up a special-purpose limited partnership controlled by one of them as a vehicle for them to invest.

While almost all VCs will insist on a right of first refusal, there are two things to pay attention to in this term that can be negotiated. First, the share threshold that defines a major investor can be defined. It’s often convenient, especially if you have a large number of small investors, not to have to give this right to them.

In a nutshell, venture debt availability, loan size, and deal terms correlate to the lender’s assessment of the company’s ability to raise more equity.

Regardless of who your investors are, fight to have them vote as a single class. It’s critical for your sanity. It keeps investors aligned. And as long as your capitalization table is rational, it won’t matter.

Some VCs will ask you who else you are talking to. If your goal is to create a competitive process, never answer this question.

How do you actually close the deal? Separate it into two activities: the first is the signing of the term sheet and the second is signing the definitive documents and receiving the cash.