Know Your Term Sheet AI Prompt

The Know Your Term Sheet AI Prompt is a specialized tool for startup founders facing a venture capital term sheet. It's not a standalone app, but a carefully crafted prompt you copy and use with your preferred large language model (like ChatGPT or Claude). You paste the prompt, attach your term sheet document, and the AI analyzes the legal document against a detailed checklist of critical questions. It explains complex provisions, flags potential red flags, and helps you understand what you're signing.

The prompt works by instructing the AI to examine the term sheet for specific, founder-critical clauses. It asks about liquidation preference type, vesting schedules for founder stock, anti-dilution mechanisms, board control provisions, and dozens of other key points. The creator, a former founder, designed it to level the playing field between founders—whose expertise is building companies—and investors who negotiate deals daily. The value is in its precise, comprehensive questioning framework that guides the AI to give targeted, actionable analysis.

This tool is for founders who have received a term sheet and need to quickly grasp its implications without immediately sharing sensitive documents. It helps you become an informed client for your lawyer and prepares you for negotiation. The prompt is free, open-source, and private—your data stays with your chosen AI provider. It's a practical first step in demystifying the funding process and protecting your ownership and control of the company you built.