In startup equity, percentage ownership is NOT equal to how much of an exit payout you will get and it doesn’t necessarily reflect your voting power. Without understanding term sheets fully, at best you will leave value on the table in deal negotiations or at worst might loose your company when it becomes distressed. Special rights such as liquidation preference, dilution protections, investor vetoes and drag-alongs can give individual shareholders the sole right to sell a company and potentially receive all the payout.
Our “ultimate term sheet guide” provides you with a great overview of all common deal terms. And our in-dept posts on the most significant deal terms will position you to lead value creating negotiations with shareholders and your lawyers.