Cooley GO's checklist names what a venture debt term sheet covers

The record

Cooley GO, the law firm Cooley LLP's free resource site for founders, publishes guidance on venture debt term sheets alongside its financing document templates. Its 'Negotiating the Venture Debt Term Sheet' page, last reviewed 1 July 2024 as the page itself states, sets out what it calls 'key concepts' a founder should understand before signing: type of loan, assets securing the loan, other liens and debt, banking relationships required by the lender, the amount and timing of funding (including tranches and triggering events), other fees, the default rate and events of default, and warrants.

What the sources establish

On warrants specifically, the page frames a list of questions rather than stating a market figure: 'How is the warrant conversion determined? What type (common or preferred) and number of shares will the lender receive upon exercise of the warrant? Is the number of shares based on the amount of the loan actually drawn at closing or the entire available loan facility? What is the warrant exercise price? When will the warrant expire?' Cooley GO is explicit that this is guidance for a negotiation, not a lender's offer: it advises that 'negotiating a term sheet is faster, cheaper, and more effective than negotiating the loan agreements themselves' and recommends seeking a competing term sheet.

Scope and revision

Cooley GO, as its own about page states, is a project of Cooley LLP, a law firm, published for founders without charge; the term sheet page carries a stated last-review date rather than a version number, which means a reader should check that date against the current live page rather than assume the guidance is unchanged. This is a checklist of what sections a venture debt term sheet typically contains, not a specimen term sheet with filled-in numbers, and it should not be read as stating what any specific lender will offer on price, tranche size or warrant coverage; the two filed venture loan agreements examined elsewhere in this pack show that those figures vary by lender and by borrower.

The decision in front of you

A founder receiving a venture debt term sheet can use Cooley GO's list as an editorial checklist while negotiating with counsel, working through each concept in turn, and should treat the specific numbers a lender proposes, the warrant coverage, the interest rate, the tranche triggers, as matters for that negotiation rather than as fixed by this guidance.

• Have you worked through each of Cooley GO's eight listed concepts against the specific term sheet in front of you, rather than only the warrant section?
• Is the number of warrant shares in your term sheet based on the amount drawn at closing or the full committed facility, a distinction the page flags explicitly?
• Have you checked the live Cooley GO page for a more recent review date than 1 July 2024 before relying on this summary?

A law firm's published checklist tells a founder what to ask; it cannot tell a founder what a specific lender will answer, which is why the two remain distinct kinds of document.