VC term sheet, 15 terms that actually matter.

1. Pre-money valuation. The valuation of the company before the investment. Pre-money + new money = post-money. Post-money also = (new money / investor ownership %). Fiercely negotiated. Market in 2026 India: seed USD 5-20M pre, Series A USD 20-50M pre, Series B USD 50-150M pre, Series C USD 150-400M pre.

2. Liquidation preference. At exit (sale or dissolution), the holder of preferred stock gets back their investment amount first (1x non-participating is the market standard in 2026). Participating preferences (2x, participating) are founder-hostile and rare at top rounds; expect them from strategic or distressed-round investors.

3. Anti-dilution. If a future round prices below the current round, existing preferred holders get additional shares to compensate. Three types: full-ratchet (very investor-friendly, rare), broad-based weighted average (market standard), narrow-based weighted average (friendlier to the investor). Default to broad-based WA.

4. ESOP pool. New ESOP pool created at the round, typically expanding the pool before the pricing. The pool is funded from the founders' pre-money equity (not post-money) — this is dilution the founders bear specifically. Standard: 10% ESOP at seed, additional 5-10% at Series A, 2-5% at later rounds. Push to size the pool realistically to your 18-24 month hiring plan, not over-size it.

5. Board composition. Standard at seed: 3 seats (founder + lead investor + independent) or 2 seats (founder + lead). At Series A: 5 seats (founder + co-founder + Series A lead + Series Seed lead + independent). Founders should hold majority of board at least through Series A if possible.

6. Protective provisions / consent rights. List of actions requiring preferred-holder consent (change in articles, additional preferred classes, debt above a threshold, change in business, sale of substantially all assets, dividends). The list is long by default; negotiate thresholds carefully. Minimum (founder-friendly) and maximum (investor-friendly) wording differ materially.

7. Information rights. Monthly / quarterly reports, annual audited financials, board materials, access to books. Market standard: monthly P&L, quarterly board report, annual audit, access to books on 2-week notice.

8. Pro-rata rights. Right of existing investor to participate in future rounds to maintain their ownership %. Usually attached to major investors (holding above threshold). Pro-rata rights at seed matter — this is how early investors double down in Series A and B.

9. Right of First Refusal (ROFR). If a founder or major shareholder wants to sell their shares, the company and/or other preferred holders have the first right to buy. Standard.

10. Right of First Offer (ROFO). Softer version of ROFR — existing holders have the first offer, but the seller is free to seek higher prices externally.

11. Tag-along right. If a founder sells, other investors can 'tag along' and sell their proportionate share at the same price. Protects minority investors.

12. Drag-along right. If a defined threshold of shareholders (typically 50-75% of preferred + founder) approves a sale, all other shareholders can be forced to sell on the same terms. Essential for enabling clean exits. Negotiate the threshold.

13. Founder vesting. Reset of founder equity to a 4-year vesting schedule with 1-year cliff. Even if founders previously held fully-vested shares, Series A often resets. Push for credit for time already served; push for single-trigger acceleration on involuntary termination.

14. Non-compete / non-solicit. 2-year non-compete and non-solicit post-termination. Reasonable but check scope (geographic, industry).

15. Founder employment agreement. New employment agreement signed with the Indian / Delaware entity — salary (initially modest, usually INR 20-40 lakh for Indian seed founder), benefits, equity vesting mechanics, IP assignment, termination clauses.