Term sheet clause 8 of 25 · Control
Board composition in a term sheet
In plain English: Who sits on the board of directors and who appoints them. Typical: Seed: often 2 founders + 1 investor, or founders only. Series A: 2 founders, 1-2 investors, sometimes 1 independent.
Founder-friendly
Founder majority at seed.
Investor-friendly
Investor majority or investor-chosen independents.
What to watch for
Red flag
Investors controlling the board early.
How to model it
This clause doesn't change the maths of your round, but it changes how you run the company. Discuss it with your lawyer and keep it in mind when you compare offers.
Negotiating it: board seats
Principle: Control matters more than founders expect.
- At seed, many boards stay founder-majority.
- Offer board observer rights instead of a seat where appropriate.
- Agree how independent directors will be chosen.
Investor wants a board seat at seed
"We'd be glad to have you closely involved. Would an observer seat work for this round, with a full seat at the Series A?"
One of the scripts from the Negotiation Playbook. The playbook has more for each topic, plus what to give and what to hold.
Not legal advice. Norms vary by country and market cycle. Have a startup lawyer review your term sheet before you sign.