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Venture Deals
Two venture investors' plain-English book on the term sheet behind a startup funding round
Why it’s worth your time
Venture Deals, by Brad Feld and Jason Mendelson, explains the term sheet one clause at a time, in plain English. Its readers are founders raising money and the investors across the table, but an employee reading over their shoulder can learn who gets paid first and who gets a say when the company makes its biggest decisions. You don't need to read it all to get that much.
What a term sheet means if you work at a startup
The book · About 6 hours of reading · Buy or borrow
How to get it
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- Read for the two kinds of term, economics and control.
Feld and Mendelson sort a term sheet's clauses into ones about money and ones about who decides. Read the explanations of those first; the parts on raising money and negotiating are written for founders and can wait.
- Find out who sits on your company's board.
Check the company website or a recent all-hands deck, or ask your manager. Write down each director, which investor or group they represent, and which seat is the chief executive's. Next time a decision arrives from above, look at who was in that room.
Good moments for this: after a funding announcement at workwhen a new investor joins the boardbefore an all-hands about the company's finances
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Making it work for you
Every workplace is different. Here’s what to think about before you start, and what might get in the way.
Things to think about
Feld and Mendelson noted in 2005 that investors had pushed for preferences well above their money back after 2001, and that most deals had since returned to one times. A round raised in a hard year can carry tougher terms than one raised in a boom, so what's normal depends on when your company raised.
What might make this harder
Ask a narrower question instead: which decisions, such as the yearly budget or a big hire, need the board's approval here. Feld and Mendelson's control terms cover who sits on the board and which decisions the investors can block, so the question gets at the same thing.
Questions people ask
What is Venture Deals about?
A guide by Brad Feld and Jason Mendelson, venture investors and co-founders of Foundry Group, to how venture capital deals come together. It grew out of a blog series they began in 2005 and walks through the term sheet clause by clause, along with fundraising and negotiation.
What's the difference between economic and control terms in a term sheet?
Economic terms decide how money is shared, such as the price and the liquidation preference, which sets who is paid first in a sale. Control terms decide who has a say, such as how the board of directors is chosen.
Which edition of Venture Deals should I read?
The fourth edition, from 2019, is the one Wiley's page describes. It adds chapters on topics such as convertible debt, bank debt and hiring a banker to sell a company.
Can employees see their startup's term sheet?
Usually not. It's an agreement between the company and its investors, and employees tend to hear the outcome, such as the amount raised and any new board members.
What it says, and how it holds up
A funding announcement at work tends to come with a number and a photo of smiling founders. The document behind it, the term sheet, is rarely shown to employees, and it sets who gets paid first if the company is sold and who gets a vote on the biggest decisions. Feld and Mendelson, venture investors who co-founded Foundry Group, started explaining those clauses on Feld's blog in 2005, and the book followed in 2011. Feld and Mendelson boil the terms that matter down to two things: economics and control.
Feld narrowed it further in a 2012 post, quoting a line he'd heard from a veteran investor at an alumni event; Fred Wilson, he noted, credits the same three terms to his first mentor in venture capital, Milt Pappas. Beyond the money, he wrote, investors mainly want three things: the right to keep investing when things go well, to get their money out first when they don't, and a board seat to know what's actually happening. For an employee, that list is a quick read of what your company's investors were protecting. Feld adds that the seat brings less power than many people assume; even so, the board as a whole is where budgets, hiring plans and the timing of a sale tend to be approved.
Two investors wrote it to help founders negotiate, so it explains the deal from a table employees don't sit at. It's also American at its core. The standard forms on the authors' site were developed at the US law firm Cooley from the National Venture Capital Association's model documents, and terms in other countries can differ.
What the book won't give you is a value for your own shares or options. Clause by clause, it explains how preferences and votes work in general; what your grant is worth depends on your company's actual terms, cap table and plan documents, which only the company can show you. This explains how things usually work; it isn't financial, tax or legal advice for your situation.
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Picked by Truest and described in our own words. The original belongs to its creator. Last updated October 9, 2026. We sell a career membership; where that’s relevant above, we say so.