Paige Finn DohertyFounding Partner, Behind Genius · Founding Partner at Behind Genius Ventures

What are some of the term sheet best practices VITALIZE Managing Partner Gale Wilkinson has learned?

4 Dec 2022 · 1 min

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In this brief interview, VITALIZE Managing Partner Gale Wilkinson shares the term‑sheet best practices he has adopted as a lead investor. He emphasizes starting with market‑standard documents, particularly the NVCA template, and then focusing on the economic terms that founders care most about: clear pricing and valuation, a 1× liquidation preference (no higher multiples even in a hot market), and the exclusion of participation rights. Wilkinson also highlights the importance of a reasonable option pool—about 10% is a useful rule of thumb—as it directly dilutes share value. Finally, he discusses control provisions, recommending a simple board structure for early‑stage companies, ideally a three‑person board, to keep governance straightforward.

Chapters

What are some of the term sheet best practices that you've learned as you've transitioned to more of a lead investor? Mm-hmm. I'm a big fan of market standard. The NVCA has a good set of docs. Ours deviate from that a little bit, but what, what founders really want to review when they're working with investors is the economics. So that's the pricing. What's the valuation? Is there a preference on it? Preference should be 1x. It should not be higher than that, even in this market, is what I think. You know, is there participation? I think there should not be participation. These are all economic pieces. The other one is the option pool. When you give an option pool up, and typically 10% is a really great rule of thumb, like that reduces the value of the share. So once again, that's the economics piece. And then there's control. Mm-hmm. So control is about things like, you know, the board. Do you have a board? I love investing even at the earliest stages when there is a 3-person board.