Term sheets are usually drafted by:

Question

BlackTom AI · Accepted Answer

Term sheets are typically drafted by the VC fund seeking to invest in the venture.

Relevant knowledge points and concepts:
- A term sheet is a non-binding document that sets out the proposed terms of an investment (valuation, equity, governance, protective provisions, liquidation preferences, etc.).
- The party proposing the transaction usually drafts the initial document to reflect its preferred deal structure and protections.
- Although negotiable, term sheets often contain standard investor-side protections drafted by investors’ counsel.

Step-by-step reasoning:
1. Who has the strongest incentive to set the starting terms? The investor (VC) wants to protect capital and secure governance rights, so it drafts provisions that address valuation, board composition, preferred stock terms, anti-dilution, and liquidation preference.
2. How are term sheets created in practice? VCs or their lawyers prepare the initial term sheet, present it to founders, and then both sides negotiate. The investor’s draft represents industry-standard clauses and the investor’s bargaining position.
3. Are there exceptions? Yes—founders or their counsel may draft or propose terms in rare cases (e.g., competitive auctions where the startup dictates terms, or if founders have very strong leverage). Third-party drafting is uncommon and not standard practice.

Calculations: none required; reasoning is qualitative and legal-practice based.

Why the correct answer is correct:
- The VC fund typically initiates and drafts the term sheet because it defines the investment conditions and investor protections; investors’ legal teams have templates and experience to propose the initial structure.

Why other options are incorrect:
- “The managers of the venture seeking VC funding” and “management and founders”: founders may negotiate or propose counter-terms but do not usually draft the initial term sheet.
- “A third party”: independent drafting to ensure fairness is atypical; third parties might mediate, but they do not normally prepare initial term sheets.

Conclusion: Therefore, the correct answer is “the VC fund seeking to fund the venture,” which matches the provided answer.

Term sheets are usually drafted by:单项选择题

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