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SAMPLE REPORT / FICTIONAL DEAL · ILLUSTRATIVE PURPOSES

Acme Robotics — Series A

£8M RAISE @ £40M POST · LEAD: NORTHWALL VENTURES · INCLUDES £2M VENTURE DEBT TRANCHE

This is what a complete Turnsheet analysis looks like — a real-world (fictional) Series A term sheet, scored against our open flag library, with negotiation language for each flagged clause.

COMPOSITE FOUNDER FAIRNESS
11
/ 100
● FLAGGED — RENEGOTIATE
EQUITY
0
DEBT
28
The headline

Three red flags. Roughly £3.4M of founder value at stake.

On a clean exit at the post-money valuation, the equity terms in this deal would cost founders roughly £2.1M relative to a market-fair clause set. The £2M debt tranche adds £1.3M of risk through warrants and a personal guarantee.

Six of the nine flags are negotiable in this term sheet without re-pricing the round.

9
FLAGS DETECTED
3
RED FLAGS
4
AMBER FLAGS
2
NEUTRAL
Per-clause analysis

Every flag, in plain English.

01 / 09 ● RED FLAG LIQUIDATION · PENALTY -30

2× Participating Liquidation Preference

Investors get 2× their money back AND share in the rest with common shareholders. On an £8M raise, that's £16M off the top before founders see anything.

WHY IT MATTERS

On a £40M sale, investors take £16M (their 2×) plus their pro-rata share of the remaining £24M (~£4.8M). Founders end up with about half of what their cap-table % implies.

HOW TO NEGOTIATE

Push for 1× non-participating as the baseline (market standard). If they push back, accept 1× participating with a hard 2× cap.

COUNTER-LANGUAGE
"1× non-participating, with no double-dip on liquidation events."
02 / 09 ● RED FLAG GOVERNANCE · PENALTY -20

VC Majority Board Control (3–2)

The lead investor and an independent they appoint outnumber founders 3 to 2. Strategic decisions, hiring, and exits go through them.

WHY IT MATTERS

Even with majority equity, founders lose effective control. CEO removal, M&A, next-round terms — all subject to a board the VC can swing.

HOW TO NEGOTIATE

Hold for a balanced 2–2–1 (founder, VC, mutually-agreed independent). Acceptable: 2 founder, 1 VC, 2 independent.

COUNTER-LANGUAGE
"Board: 2 founder seats, 1 lead-investor seat, 2 independent directors mutually approved by both parties."
03 / 09 ● RED FLAG RECOURSE · PENALTY -50

Founder Personal Guarantee (Bank Debt)

You personally guarantee the £2M growth-capital facility. If the company defaults, the bank can come after your home, savings, and future earnings.

WHY IT MATTERS

This is the single most consequential clause a founder can sign. The PG survives the company. It follows you out of the business, through bankruptcy, into the next decade.

HOW TO NEGOTIATE

Refuse outright. If credit is unavailable without a PG, restructure: cap the PG at 25% of facility, sunset after 18 months of clean covenants, or use a board-approved corporate guarantee instead.

COUNTER-LANGUAGE
"Guarantor liability capped at 25% of outstanding principal, with full release upon 18 months of compliant covenant performance."
04 / 09 ● WATCH EXIT RIGHTS · PENALTY -25

Drag-Along, No Threshold Trigger

The lead investor can force a sale of the company without a minimum approval threshold from common shareholders.

WHY IT MATTERS

On a down-round acquisition, the VC can compel founders and employees to sell their shares — even at a price below their preference, recovering investor capital while wiping common.

HOW TO NEGOTIATE

Add a 70%+ approval threshold and minimum return floor (e.g., common receives at least their original investment back).

COUNTER-LANGUAGE
"Drag-along requires (i) approval of 70% of preferred and 50% of common, and (ii) common receives no less than 1× their pro-rata investment."
05 / 09 ● WATCH VESTING · PENALTY -15

Founder Vesting Reset

Your already-vested shares are reset to a fresh 4-year cliff at closing. You restart from zero on stock you already earned.

WHY IT MATTERS

If you leave or are removed within the first 12 months, you forfeit your entire stake — even shares you fully earned over the prior years building the company.

HOW TO NEGOTIATE

Refuse the reset entirely. If pressed, accept partial credit for prior service (typical: 1 year of credit per 2 years previously vested).

COUNTER-LANGUAGE
"Founders retain all previously-vested shares; new vesting applies only to additional founder grants."
06 / 09 ● WATCH EQUITY KICKER · PENALTY -22

Warrant Coverage on Venture Debt (12%)

On a £4M debt facility, the lender gets warrants worth 12% of facility value (~£480k of equity) at the latest preferred price.

WHY IT MATTERS

You take on debt — meant to be cheaper than equity — but pay a meaningful equity premium too. On exit, the lender double-dips: principal + interest + their warrant gain.

HOW TO NEGOTIATE

Push to 5–7% coverage (market for early-stage venture debt). At 5%, that's £200k instead of £480k.

COUNTER-LANGUAGE
"Warrant coverage capped at 7% of facility value, exercisable at the most recent preferred-share price."
07 / 09 ● WATCH PROCESS · PENALTY -10

No-Shop, 90 Days

You agree not to talk to any other investor for 90 days while diligence proceeds.

WHY IT MATTERS

A long no-shop weakens your leverage. If diligence reveals issues or terms get re-traded, you can't credibly walk to a competing offer.

HOW TO NEGOTIATE

Cap at 30–45 days. Add carve-outs for inbound enquiries.

COUNTER-LANGUAGE
"Exclusivity period: 45 days from term sheet signing, with carve-outs for unsolicited inbound enquiries."
08 / 09 ● NEUTRAL ANTI-DILUTION · PENALTY 0

Anti-Dilution: Broad-Based WACR

Standard market protection for investors against down rounds, calculated using a broad-based weighted-average ratchet.

09 / 09 ● NEUTRAL PRO-RATA · PENALTY 0

Pro-Rata Rights, Mutual

Both investors and founders maintain pro-rata participation rights in future rounds.

ABOUT THIS REPORT

Acme Robotics is a fictional company used to illustrate a complete Turnsheet analysis. Clause language, valuations, and counterparties are not real. The penalty scores, flag library, and methodology are real and identical to what we will use in the live product. Always consult qualified legal counsel before signing any term sheet.

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