Venture Deals
Be Smarter Than Your Lawyer and Venture Capitalist
Brad Feld and Jason Mendelson · 2011 · Business
11 min · 11 chaptersNarrated in your voice
What it's about
Brad Feld and Jason Mendelson, both longtime venture capitalists, wrote this book to demystify the venture capital term sheet for entrepreneurs who sit across the table from investors with far more deal experience. They argue that founders lose leverage not because terms are inherently unfair but because they don't understand what each clause does economically and structurally. The book mattered because it was one of the first insider accounts to explain VC mechanics in plain language, leveling an information gap that had favored investors for decades.
Reading plan
Pick a finish date and Genius lays out the days — the plan shows today's target and keeps you honest.
Read together
Start a circle and share the code — everyone sees everyone's honest place in the book. Accountability, not leaderboards.
Who it's for
- First-time founders preparing to raise a seed or Series A round - Startup lawyers and business students who want the investor's-eye view of deal terms - Angel investors and early VC associates learning how term sheets actually get negotiated
What’s inside
- 1Why VC Funds Behave the Way They Do1 min
A venture capitalist's advice and urgency are shaped less by your company's needs than by the fund's own lifecycle and fee structure, so founders who understand fund economics can predict investor behavior.
- 2The Term Sheet Has Two Halves: Economics and Control1 min
Every clause in a term sheet falls into one of two buckets, economics or control, and founders who only negotiate price while ignoring control terms often give away more than they realize.
- 3Valuation and the Option Pool Shuffle1 min
Pre-money valuation is not the honest number it appears to be, because investors routinely require an expanded employee option pool to be created before their money comes in, which silently reduces the founder's real share price.
- 4Liquidation Preferences: Who Gets Paid First1 min
A liquidation preference determines the order and multiple of payout in an acquisition or shutdown, and a seemingly small change from 1x to participating preferred can shift millions of dollars away from founders and employees.
- 5Anti-Dilution and Pay-to-Play1 min
Anti-dilution provisions protect investors from a future down round by repricing their shares, and the difference between full-ratchet and weighted-average formulas can mean the difference between a founder retaining meaningful ownership or being wiped out.
- 6Control: The Board and Protective Provisions1 min
Board composition and protective provisions determine who actually runs the company day to day, and founders often surrender this control gradually across multiple financing rounds without realizing the cumulative effect until it is too late.
- 7Convertible Notes and Alternative Instruments1 min
Convertible debt and instruments like the SAFE defer the valuation conversation to a later round, which can be efficient for early fundraising but creates its own risks if the conversion terms are not carefully capped and negotiated.
- 8How to Actually Negotiate the Deal1 min
The negotiation itself is a repeated, relationship-based process rather than a single adversarial event, and founders who treat it as war rather than as the start of a long partnership damage themselves even when they win individual points.
About Brad Feld and Jason Mendelson
Brad Feld is a managing director at Foundry Group and an early investor in companies like Zynga and Fitbit. Jason Mendelson co-founded Foundry Group and previously worked as a startup lawyer and VC. Both have sat on dozens of boards and negotiated hundreds of term sheets, giving the book its practitioner-level detail.
