The Fallacy of Non-Market Terms.

"That is not market" is a phrase that I hear many times from founders, who repeat their attorneys' words. Luckily there are standards within deal documentation from the National Venture Capital Association (NVCA) that outline how documents should start, but often, this is merely an outline. The problem is that no company performs the same. Nor do every venture capital firm's investment and risk tolerances are the same. This creates a challenge to have completely standardized documents.

The problem is that a lawyer does not know honestly what the market is. They have a sample size from the market, but saying outwardly they know how all deals are being transacted is foolish. It is unreasonable for a VC firm to say they know what the market is and isn’t as well.

When a founder tells me that my term sheet is not market because their lawyer told them so, I remind them that I am one data point within the overall market. Their lawyer is not a data point because they aren't putting any money in the deal. The only way to know if an offer is a market or not is to compare it to others for your own company at the same period of time. Anecdotal advise is always dangerous.