You came, you pitched, you conquered. Congratulations! But do you know what to do once you’re asked to sign a term sheet? Let me say that first, you should have already retained a good startup lawyer. Most investors will expect this. And a good lawyer can be a real advocate for you: by keeping negotiations on track, explaining terms, and making sure any deal you sign doesn’t have problematic (and costly) clauses that could leave you at risk.

That said, you should already have a sense of what to expect going into discussions. There’s less chance of you being blindsided. You’ll also have the opportunity to decide ahead of time (and figure out your negotiating strategy on) on what you care about the most. It could be the size of the option pool, or maybe the provisions around reverse vesting.

Here are explanations of some key standard term sheet provisions and what they’re designed to achieve.

Anti-Dilution — This protects investors from “down rounds,” or future sales of preferred stock at a lower valuation than the round they participated in. This provision can provide that re-pricing of the shares be done on a: 1) weighted average basis, “broad-based” (including outstanding and potential outstanding stock) or “narrow-based” (only outstanding shares); or by 2) a “full-ratchet,” where previously issued shares are automatically repriced to reflect the lowest value of newly issued shares.

Board of Directors — This one’s pretty straightforward. It specifies the size of the Board, how seats will be allocated and assigned, and who controls them. VCs will usually want to hold one or two Board seats.

Conversion — This clause states the triggers, whether at the investors’ option or mandatory (at an IPO), and formula for the conversion of preferred shares to common stock. It will also set terms such as a minimum stock price, and/or minimum proceeds, as well as the percentage of shareholders required to agree to any deal.

Drag Along Rights — As the words imply, this compels founders to vote their shares in favor of a merger or sale of the company if the deal has Board approval and the backing of a certain percentage of preferred stockholders. Make sure you understand and negotiate the conditions under which you could be forced to agree to a sale.

Employee Stock Options — This provision lays out the size of the option pool and the vesting structure. Keep in mind that while you’ll hear 20% referred to as the “standard,” this is something you should negotiate. The shares in the option pool are allocated from your founders’ equity, so you need to balance dilution against your ability to offer enough equity to attract the right future talent.

Expiration — The date by which the agreement expires. This varies widely, you’ll sometimes see exploding offers (not a good sign), and it’s in both sides interest to try to keep it short to avoid letting a potential deal languish. You’ll lose momentum, your investors might get cold feet or lose interest, and it encourages deal shopping.

Information Rights — Stipulates that investors will receive disclosures of financial information, such as financial statements, in which forms, audited or unaudited, and at which intervals. This clause should also include confidentiality requirements.

Key Person Insurance — Required insurance coverage on founders and key members of your management team. This is really a no-brainer, whether or not an investor requires it, you need to limit the downside risk to you and the business in case something happens to you or any of the founders.

Lock-up — The mandatory holding period for shares (investors, directors, and officers) post an IPO or liquidity event. 180 days is standard.

No Shop — You agree to not solicit or negotiate a potential deal with another investor for a specified period of time, typically anywhere from 30-60 days. The investor agrees to move towards timely completion of the proposed deal.

Preemptive Rights — Gives investors the right to participate on a pro-rata basis in any future funding rounds. This is to ensure the first investor’s stake is not diluted in later funding rounds involving other investors.

Pre-money Valuation — This is what investors think your company is worth, prior to their investment. It can get really contentious, and there is no “right” answer. The best way to prepare for negotiating is to have a reasonable figure or range in mind, supported with facts, and based on rational criteria. You can get to this by using one or a combination of approaches.

Right of First Refusal/Co-Sale — The right of first refusal gives investors first dibs, on a pro-rata basis, to any shares founders sell in future funding rounds. The co-sale term requires founders to offer investors the right to participate in any sale of their shares on a pro-rata basis on the same terms as the founders.

 

“Ten years ago most people here did not know what this brown paste was,” says Anthony Brahimsha of the chickpea dip that is now nearly ubiquitous on menus in the U.S..

Born to Syrian parents, Brahimsha knew that hummus in the Middle East is much better than that found in American grocery stores. With the help of Mike McCloskey, owner of Select Milk Producers, the sixth largest dairy cooperative in the country, he developed a hummus called Prommus that is higher in protein –– three times that of other dips. It preserves the traditional flavor by using cold pressure, rather than heat, in the kitchen.

“What Halo Top is to ice cream and Chobani is to yogurt, we are to hummus,” Brahimsha says, by way of explaining that Prommus is also changing the industry.

The company name is a combination of the words “protein” and “hummus,” but is also a play on the word “promise.” With 1 percent of sales benefitting the World Food Program to fight global hunger, Brahimsha hopes that the product can have a significant effect on ending hunger and making nutritious foods available wherever they are needed.

Prommus cofounder Anthony Brahimsha, who has spent a lot of time on humanitarian missions, believes his hummus could help feed the world.

While the initial idea was born out of his humanitarian work in refugee camps along the Turkish/Syrian border, Brahimsha has even bigger dreams. The world needs to find more ways to make nutritious foods for people who are going hungry, and he thinks Prommus and its innovative production process are part of the solution. Two patents are currently pending.

The company’s four varieties (original, red pepper, olive, and avocado) are sold in the Midwest, primarily in Illinois and Michigan. These flavors were taste-tested by Brahimsha’s fellow members at Chicago’s WeWork River North, a community that he says has been invaluable to the startup.

“There are a lot of co-working spaces, but not everywhere is a community of social entrepreneurs who are rooting for their peers,” he says.

A winner in the business venture category at the Nashville Creator Awards, he says he’ll be able to start the next stage of expansion for his company, primarily by adding staff.

“As soon as you win this award, all the blood sweat and tears that you put into the company comes together,” he says. “Everything that you have been doing, the people that were with you along the way, finally, it feels like an affirmation that you were doing the right thing.”

 

Melanie Faye grew up in Nashville, but she doesn’t credit Music City with her success. She credits Guitar Hero. Yes, that Guitar Hero, the video game that allows players to mimic the sounds and moves of their favorite stars. For Faye, it was Michael Jackson.

“I don’t think growing up in Nashville introduced me to guitar players,” Faye says. “My parents were chemists. I was not able to go to bars and see local shows. Guitar Hero introduced me to all this music I was not exposed to. Guitar Hero looked really cool. It made me feel empowered.”

So, perhaps it shouldn’t be a surprise that Faye, now 20, has found fame via YouTube. After dropping out of college three semesters in to pursue her music career, Faye posted videos of herself sitting in her bedroom and playing covers of John Mayer and Mariah Carey.

“Guitar Hero introduced me to all this music I was not exposed to,” says Melanie Faye. “Guitar Hero looked really cool. It made me feel empowered.”

She also used the platform to debut some of her original work, which she describes as a mixture of R&B, hip hop, and pop. Her voice, serious guitar-playing chops, and friendly demeanor propelled those videos to more than 10 million views. She was so popular that the guitar company Fender tapped her to demo a new line of the instrument.

“I thought, ‘This is it! I’m viral. I made it!’ But it does not work that way,” she says. Faye makes ends meet by working at a local doughnut shop and teaches guitar. She also keeps working on her music the old-fashioned way, having been tapped to be the opening act for musicians like Noname and Mac Demarco. Her most recent gig was at the Nashville Creator Awards.

She is working on her first album, which she hopes will be out by the year’s end. A self-proclaimed perfectionist, Faye has been working on Homophone for years.

“If I had known it was going to take this long,” she says, “I wouldn’t have told people it was going to be out soon.”

Faye is also working to relieve the jitters that come with performing live, rather than in front of a camera. A recent show at the Hollywood Palladium was a game changer.

“I typically am really shy and inhibited on stage. But I felt so much support and positive energy, I just let loose,” she remembers. “I think to an extent you just have to have fake confidence at first. I walked up and had a confident demeanor and once I heard crowd cheering, then I was confident.”

“It happens overnight,” Maria Vertkin says. “An immigrant moves to the U.S. and goes from being a surgeon to washing toilets.”

College degrees and professional experience from their home country don’t always mean as much as they should when an immigrant starts a new life abroad, says Vertkin. She knows from experience: She spent her childhood in Russia and Israel before immigrating to the United States. But she realized that they have one thing that will always be of use to them: their language skills.

“It doesn’t make sense if you have something as valuable as a second language to not use it,” says Vertkin, who speaks English, Russian, Hebrew, Spanish, and Portuguese.

Vertkin, a Boston-based social worker, wanted to help train women to use their multilingual skills to their advantage. She saw a need that they could fill in the medical field. Hospitals in Massachusetts struggled to find interpreters for their patients who aren’t native English speakers. Without interpreters, expensive and even potentially fatal medical errors are possible.

A Found in Translation graduate shows off her diploma.

“The jobs are plentiful and the demographics are shifting,” says Vertkin. “Not only do they serve the local population, but medical tourists come from other countries and they need interpreters.”

The idea was a hit with the judges of WeWork’s Nashville Creator Awards. Found in Translation took home a $72,000 prize in the nonprofit category.

In 2011, Vertkin started Found in Translation to help homeless and low-income women achieve economic security by making their language skills an asset, rather than a liability. Within a few weeks of announcing the first class, she had 200 applications.

The nonprofit offers medical interpreter certificate training as well as other interpreter programs. And the training includes more than the core curriculum — childcare, transportation, job placement, and access to mentors for professional development are also part of the program.

The 186 graduates of Found in Translation classes between 2012 and 2017 earned approximately $1.86 million cumulatively more per year than they did before enrollment. That’s about $10,000 more per person annually. She says that if she wins in the nonprofit category at the Nashville Creator Awards, she can expand the program.

Classes currently take place in Boston, where Vertkin estimates they could easily double in size with the right funding. Every city in the U.S., she says, has the potential for success with Found in Translation.

“There is opportunity and need and we are connecting them,” Vertkin says. “The biggest risk is for employers not hiring multilingual employees.”

If Janett Liriano has her way, you won’t be using your FitBit much longer.

Liriano is CEO of Loomia, a New York-based firm at the intersection of tech and fashion. The company creates “intelligent drapeable circuits” that are soft enough to be embedded into textiles and can be safely washed and dried. Instead of wearing a step tracker on your wrist, it could be embedded into your running shoes.

That’s just the beginning of what these circuits can do. Those shoes might not just track your steps, but can also measure the pressure on your feet, giving you information on how you should adjust your gait. They might heat up and keep your feet warm in winter. And a light might keep you safer on a nighttime jog.

Loomia’s CEO Janett Liriano and founder Maddy Maxey

Liriano has two patents for her product and others in the pipeline for the smart fabric-enabling circuits. Her team is working with more than 80 brands on how they can integrate the smart technology into their designs. The current emphasis is on clothing, but the flexibility of the circuit opens the door to other products in the future.

“We are category agnostic,” Liriano says. “If you can make a washable circuit, you can put it on the floor. You can put it in wallpaper.”

Liriano, who took home third place in the business ventures category at the Nashville Creator Awards, sees potential in fields ranging from medicine to transportation.

Not only can Loomia transform the ways smart devices are used, it can also change what happens to all that data once it is collected. The company is looking at ways that consumers can sell their data to interested parties — or choose not to share it.

Liriano, a “born-and-bred New Yorker,” thinks the city is the right place for the firm. It’s one of the country’s great fashion hubs, but it also has a strong startup scene.

New Yorkers are inherently scrappy and resourceful,” she says. “For a business that is not super capitalized, that’s a good network. We are hard-core hustlers.”