A Series A term sheet example usually fits on one or two pages and covers about a dozen clauses: securities, amount, valuation and option pool, liquidation preference, dividends, conversion, anti-dilution, voting and protective provisions, board, pro rata and information rights, drag-along, vesting and a binding no-shop. Below is a full sample for an illustrative SaaS company raising $15M at a $60M pre-money valuation. Each clause shows the wording, what it does to founders in dollars or control, and whether it is market. In Cooley's Q2 2026 data, 95.8% of deals used a 1x preference and 96.4% were non-participating.
This page is a filled-in term sheet you can read line by line. For the general explainer (what a term sheet is, economic vs control terms), start with our term sheet guide. Here we go clause by clause through one example deal, then run the numbers.
Not legal advice. A term sheet is a negotiation between your company and an investor, and a startup lawyer should review any real one before you sign.
Where the clause structure comes from
Most US venture term sheets follow two public templates. The first is the Y Combinator Series A term sheet template, a one-page sheet that YC describes as what a "good Silicon Valley VC" would send, with bracketed items being the ones "always or frequently negotiated" (YC blog, Jan 28, 2019). The second is the National Venture Capital Association's model document set. Its model legal documents page lists the Certificate of Incorporation, Stock Purchase Agreement and Investors' Rights Agreement as updated October 2025, and those are the long-form documents a term sheet turns into after signing. The clause names below follow both.
For market data we use the Cooley Q2 2026 Venture Financing Report (166 financings, published August 17, 2026) and Carta's July 2026 benchmark of over 1,000 priced software rounds (Carta data archive, July 10, 2026).
The example company
ExampleCo, Inc. is an illustrative Delaware SaaS company. Before the Series A it has 11,000,000 fully diluted shares:
| Holder (before the round) | Shares | Fully diluted % |
|---|---|---|
| Founders (common) | 8,000,000 | 72.73% |
| Seed investors (Series Seed preferred, $3.0M invested at $1.50) | 2,000,000 | 18.18% |
| Option pool (600,000 granted + 400,000 available) | 1,000,000 | 9.09% |
| Total | 11,000,000 | 100% |
A lead investor offers $15M. Carta's July 2026 software benchmark puts the median Series A at "$80M on $14.4M raised" with 18% dilution, so a $15M raise selling 20% sits close to the middle of the market. All numbers that follow are illustrative and were checked in Python.
The annotated term sheet, clause by clause
1. Company and securities
Company: ExampleCo, Inc., a Delaware corporation. Securities: Series A Preferred Stock (the "Series A").
What it means: the investor buys preferred stock, not common. Preferred carries the liquidation preference, protective votes and anti-dilution rights described below. Founders and employees hold common, which gets none of those.
Market or not: standard. If earlier money came in on SAFEs or notes, the YC template adds that they "convert on their terms into shadow series of preferred stock." See SAFE vs convertible note for how those conversions price.
2. Amount and closing
Investment amount: $15,000,000, of which $12,000,000 from the Lead Investor and $3,000,000 from other investors approved by the Company.
What it means: the round size, and who fills it. The lead usually sets the terms for everyone else.
Market or not: standard. Watch for tranches (money released only when milestones are hit). The NVCA's October 2025 update added an optional framework for milestone-based tranched closings to the Stock Purchase Agreement (Foley summary). Tranching means you may not get the full $15M, so plan runway on the first tranche only. Size the raise against your plan with the how much to raise calculator.
3. Valuation and option pool
Valuation: $60,000,000 pre-money, including an available option pool equal to 12% of the post-closing fully diluted capitalization. Price per share: $4.8113 (the "Original Issue Price").
What it means in dollars: this is the clause that moves the most money. Because the pool top-up sits inside the pre-money, the company must issue 1,470,588 new pool shares before the investor buys. The price is $60M divided by 12,470,588 pre-money shares, which is $4.8113. Existing holders are really selling at an effective pre-money of $52.9M (11,000,000 × $4.8113). About $7.1M of the headline valuation is the new pool, paid for by the people already on the cap table.
If the same pool were added after the money (shared by everyone), the price would be $5.4545 and founders would end at 52.73% instead of 51.32%. That 1.4 point gap is the cost of the pre-money pool.
Market or not: a pre-money pool is common practice. YC's own template states valuation as post-money "including an available option pool equal to [__]% of the post-Closing fully-diluted capitalization," which produces the same math. The negotiable part is the size. Argue for a pool that covers the hires in your next 18 to 24 months, backed by a hiring plan, not a round number. Read more on how SaaS valuation works and test pool sizes in the dilution calculator.
4. Liquidation preference
Liquidation preference: 1x non-participating. On a liquidation or a sale of the Company, each Series A holder receives the greater of (i) the Original Issue Price plus declared but unpaid dividends, or (ii) the amount it would receive if converted to common. Series A and Series Seed rank pari passu.
What it means in dollars: the Series A gets its $15M back first, or its 20% share, whichever is larger. It cannot take both. The NVCA model charter (October 2025) words this as the greater of "[__ times] the applicable Original Issue Price, plus any dividends declared but unpaid" or the as-converted amount, paid "on a pari passu basis" across series unless the parties choose seniority.
Market or not: 1x non-participating is the market standard. Cooley's Q2 2026 report shows 95.8% of deals with a 1x preference and 96.4% with non-participating preferred. Anything above 1x, or participating ("money back plus a share of the rest"), is what YC's post calls non-standard. The exit table further down shows what participation would cost ExampleCo's founders.
5. Dividends
Dividends: 6% non-cumulative, payable only if and when declared by the Board.
What it means: in practice nothing. Early-stage companies almost never declare dividends, and a non-cumulative dividend does not build up if skipped.
Market or not: standard (this is the YC template wording). The founder-unfriendly version is a cumulative or accruing dividend, which adds to the preference every year. On $15M, an 8% accruing dividend would add $1.2M a year to what the Series A takes before common gets anything. Cooley counted accruing dividends in only 3% of Q2 2026 deals.
6. Conversion
Conversion: convertible into common at the holder's option at any time, initially 1 to 1. Automatic conversion on an IPO or on the vote of a majority of the Preferred.
What it means: conversion is how preferred gives up the preference to take its ownership share in a large exit. The 1 to 1 ratio changes only through anti-dilution (next clause) or stock splits.
Market or not: standard. Check any minimum IPO price for automatic conversion; a high bar gives investors a say over IPO timing.
7. Anti-dilution
Anti-dilution: standard broad-based weighted average.
What it means in shares: if ExampleCo later sells stock below $4.8113, the Series A conversion price drops by formula, so the Series A converts into more common. The NVCA model charter's formula is CP2 = CP1 × (A + B) ÷ (A + C), where A is shares outstanding before the new issue, B is shares the new money would buy at the old price, and C is shares actually issued. Suppose ExampleCo later raises $6M at $3.00. Broad-based weighted average moves the conversion price to $4.6054, giving the Series A 139,434 extra shares. Full ratchet would reset it to $3.00 and give them 1,882,353 extra shares, all taken from everyone else.
Market or not: broad-based weighted average is standard and is the version the YC template names. Full ratchet is founder-unfriendly. Down rounds are not rare: Cooley reported 12.1% of Q2 2026 deals as down rounds. Run your own numbers in the anti-dilution calculator.
8. Voting rights and protective provisions
Voting: Series A votes with common on an as-converted basis. Approval of a majority of the Preferred is required to: (i) change the rights of the Preferred; (ii) change the authorized shares; (iii) create senior or pari passu securities; (iv) redeem or repurchase shares; (v) pay dividends; (vi) change the number of directors; (vii) liquidate, dissolve or sell the Company.
What it means in control: these are vetoes. Items (ii) and (iii) together give the Preferred a say over your next financing, and item (vii) gives them a say over a sale. YC's post points to exactly those clauses.
Market or not: the seven items above are the YC template list and are market. The founder-unfriendly version adds operating vetoes: budget approval, executive hires, debt above a small amount, or a separate Series A vote. Each extra item is a decision you can no longer make alone.
9. Board of directors
Board: three directors. Lead Investor designates one. Common holders designate two.
What it means in control: founders keep a 2 to 1 board majority. The board hires and fires the CEO, approves option grants and approves a sale.
Market or not: YC calls 2 to 1 founder control the clean Series A board and warns that "the way in which founders most often lose control at the Series A is with a 2-2-1 board structure" (two founders, two investors, one independent). Giving up the board majority at Series A is a concession that can outweigh a few points of valuation.
10. Pro rata, information and registration rights
Other rights: Major Investors (holding at least [__] shares) receive pro rata rights on future issuances, annual audited and quarterly unaudited financial statements, and standard registration rights.
What it means: pro rata lets an investor buy enough of the next round to keep its percentage. In the NVCA Investors' Rights Agreement this is the "Right of First Offer," which applies only to "Major Investors." Information rights set what you report and how often.
Market or not: all standard. Two things to check: the Major Investor threshold (a low one hands pro rata to many small holders, which can crowd your next lead) and whether audited annual statements are required at your size, since an audit costs real money. Our pro rata rights guide covers the math, and the investor update template covers the reporting side.
11. Drag-along
Drag-along: founders, investors and 1% holders must vote for a sale approved by the Board, a majority of the Preferred and a majority of the common.
What it means in control: once those three groups agree, small holders cannot block a sale. Requiring a common majority protects founders from being dragged into a sale they oppose.
Market or not: standard as written (YC wording). Founder-unfriendly versions let the Preferred alone trigger the drag, or set no minimum price.
12. Founder and employee vesting
Vesting: employees 4 years monthly with a 1-year cliff. Founders: 25% vested at closing, remainder monthly over 36 months.
What it means: founder shares already owned can be made subject to repurchase if a founder leaves. Getting credit for time already worked (the 25% here) is the usual ask.
Market or not: the employee schedule is the YC template default. Founder terms are bracketed in YC's sheet because they are negotiated deal by deal. Watch for full revesting with no credit, or no acceleration on a sale.
13. Expenses, no-shop and binding terms
Company counsel drafts documents. Company pays Lead Investor's legal fees, capped at $30,000. No Shop: for 30 days the Company will not solicit or accept other offers. The No Shop is binding; everything else is non-binding.
What it means: you pay the lead's lawyers up to the cap and stop talking to other investors for 30 days.
Market or not: this is the YC template wording. Push back on a longer no-shop or an uncapped fee clause.
The cap table after the round
| Holder (after the round) | Shares | Fully diluted % | Value at $4.8113 |
|---|---|---|---|
| Founders | 8,000,000 | 51.32% | $38,490,566 |
| Seed investors | 2,000,000 | 12.83% | $9,622,642 |
| Option pool (12% available + granted) | 2,470,588 | 15.85% | $11,886,792 |
| Series A investors | 3,117,647 | 20.00% | $15,000,000 |
| Total | 15,588,235 | 100% | $75,000,000 |
Founders went from 72.73% to 51.32%. The Series A took 20% and the pool top-up took most of the rest. You can rebuild this table with your own shares in the cap table calculator.
What the liquidation preference pays at two exits
Assume the company is sold, the whole pool has been granted and exercised, and option strike prices are ignored for simplicity. Both preferred series are 1x non-participating and pari passu. Each series picks whichever is larger: its preference or converting to common.
| Exit value | Series A | Seed | Founders | Option holders |
|---|---|---|---|---|
| $40M, 1x non-participating | $15,000,000 (takes preference) | $4,009,434 (converts) | $16,037,736 | $4,952,830 |
| $40M, if Series A were participating | $20,000,000 | $3,207,547 | $12,830,189 | $3,962,264 |
| $200M, 1x non-participating | $40,000,000 (converts) | $25,660,377 | $102,641,509 | $31,698,113 |
| $200M, if Series A were participating | $52,000,000 | $23,735,849 | $94,943,396 | $29,320,755 |
At $40M, below the $75M post-money, the Series A owns 20% but takes 37.5% of the proceeds, because $15M back beats 20% of $40M ($8M). Founders get 40.1% while owning 51.3%. That is how a 1x preference is supposed to work: it protects the investor in a weak exit.
Participation is where the real damage shows. At $40M it would move $3.2M from the founders to the Series A. At $200M, where a non-participating investor simply converts, participation still costs founders $7.7M. Model your own waterfall in the liquidation preference calculator.
Market vs founder-unfriendly, on one page
| Clause | Market (2026) | Founder-unfriendly |
|---|---|---|
| Liquidation preference | 1x, non-participating (95.8% / 96.4% of Q2 2026 deals, Cooley) | 2x or more, participating, or senior to all earlier series |
| Dividends | Non-cumulative, if declared | Cumulative or accruing (3% of Q2 2026 deals) |
| Anti-dilution | Broad-based weighted average | Full ratchet, or narrow-based |
| Option pool | Sized to an 18 to 24 month hiring plan | Large round number in the pre-money |
| Board | Founders keep majority (2 to 1) | 2-2-1 or investor majority at Series A |
| Protective provisions | Charter, new securities, sale, dividends | Operating vetoes (budget, hires, debt) |
| Pay-to-play | Absent | Present (8.4% of Q2 2026 deals) |
| Redemption | Absent | Investor can force a buyback (5.4% of Q2 2026 deals) |
| No-shop | 30 days | Longer than 30 days |
At seed, many rounds skip a priced term sheet and use a SAFE. A priced seed round uses the same clauses in a shorter form. The SaaS fundraising guide covers which instrument fits which stage.
Frequently asked questions
What does a Series A term sheet look like?
Usually one to two pages in a two-column layout: the clause name on the left, the agreed term on the right. The YC template covers company, securities, amounts, valuation, liquidation preference, dividends, conversion, voting rights, drag-along, other rights, board, vesting and no-shop, in that order.
Who drafts the term sheet?
The lead investor normally sends the term sheet. After signing, the definitive documents (charter, stock purchase agreement, investors' rights, voting and co-sale agreements) are drafted by counsel. The YC template specifies that company counsel drafts them.
Is a term sheet legally binding?
Mostly not. The YC template says the no-shop is "legally binding between the parties" and "everything else in this term sheet is non-binding."
What percentage do Series A investors usually take?
Carta's July 2026 benchmark of software rounds put median Series A dilution at 18%. YC notes a lead "generally wants 20%," though the number moves with each side's negotiating position.
Is a pre-money option pool normal?
Yes. It is common for the pool top-up to be counted in the pre-money, which means existing holders bear its dilution. The size is the negotiable part. In our example, a 12% pool cost the existing holders about $7.1M of headline valuation.
Where can I find a term sheet template?
The YC Series A term sheet is a free one-page template. The NVCA model documents are the long-form standard. Use either as a reading guide; your lawyer will work from the investor's draft.
Model the round before you sign
A term sheet sets the price and the terms. Whether the deal is good depends on what the money buys: how many months of runway, which hires, what ARR you reach before the next raise. Adlega is a driver-based 36-month SaaS model with native MRR, ARR, churn, CAC, burn and runway, plus scenarios, so you can put the $15M into the plan, compare a smaller raise at a lower price, and see how each changes runway. The AI CFO explains how each number is calculated. Try Adlega free.