Is the team confident this is the best term sheet we’ll receive from a lead investor?
If you haven't already, any other lead VC's need to be notified you have an exploding term sheet, and should be asked to put forth terms ASAP. Basically we need to first confirm this is the lead term sheet we want to sign.
You can also ask anyone who is not a lead but wants to follow to express how much they want to reserve in the round.
If this is the term sheet you know you want to accept, then, here are next steps:
Sign the term sheet. This commits you to the investor during the "non-solicity" period specified in the term sheet -- e.g. for the next 30 days.
Once signed, you need to get to the minimum raise int he term sheet through doing 2 things:
Identify investors to round out the round. Ask the VC firm after you've signed if there are investors they want to connect you to for rounding out the round (if you need other investors)
Notify all those that want to follow in the round that you have signed a term sheet, share with them the term sheet, and ask them to confirm if they want to invest in the round and how much in the next 5 days. You will then revert back if you can hard confirm a spot for them in the round. You can use this template (also copied below).
Credit: Ravi Belani
Email Template: After Signing Term Sheet, Notify Potential Follow-On Investors
Purpose: Notify follow-on investors of the signed term sheet, share terms, and prompt them to confirm their commitment and amount within 5 days to secure their spot in the round.
Email Template:
Subj: [Time Sensitive] Signed Term Sheet! Let us know if you want in
Dear [Investor Name] -
Please keep confidential, but [company] has signed a term sheet for our next round led by [VC]. [VC] is investing $X against a $X raise at a $1X post. Term sheet is attached below.
We are asking all others who want to participate in the round to let us know the amount you want to reserve by [5 business days from now].
We will then revert back if we can invite you into the round.
Please reach out if there are any other questions.
With thanks,
[Company ]Team