Ask HN: 2 page simple term sheet and 100+ page contracts. What to do? We received a very straight forward term sheet which we completely agree upon. However, after signing the term sheet we received 100+ page legal document. What should we do? 1. Engage a law firm which will take time. 2. Try to find someone who has hands-on experience 3. Read it ourselves and figure it out. 4. ??? |
Even if it you don't care about yourself, or any future employee who might be saddled with the currently unknown 'gotchas', you will still be screwing friends/family investors and your spouses and children. Seriously, get a good attorney.
It's an accepted and expected part of finance that you will incur some legal costs getting a round of financing done.
All that said, if this is an angel round, that document is too long. A good angel or group will want to keep it simple, and leave the major lawyering to a Series A. But overall, a) congratulations! and b) suck it up, and go get the best lawyers you can find.
p.p.s. Drop me a note: vessenes@gmail.com if you need to talk it over with someone who doesn't have a vested stake in it, I'd be happy to chat about it with you.
Cautious congratulations, by the way - this must be an exciting time, even if it's a bit challenging.
This should help keep your legal costs down, as the attorney can focus his or her time on the issues most important to you.
EDIT: My brother practices this area of law with offices in NY & NJ; if you want to keep costs down he could probably put a junior person on your case. You can reach me at my user name neuenhaus.org