Term sheet clause 9 of 25 · Control
Protective provisions in a term sheet
In plain English: Actions that need preferred shareholders' approval (e.g. selling the company, new senior shares, changing their rights). Typical: A standard list protecting the investor's economic rights.
Founder-friendly
Short, standard list; majority of all preferred votes together.
Investor-friendly
Long list; series-by-series vetoes.
What to watch for
Red flag
Approval over day-to-day operations (budgets, hiring, small contracts).
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.
Not legal advice. Norms vary by country and market cycle. Have a startup lawyer review your term sheet before you sign.