Background Note | HBS Case Collection | March 2010 (Revised December 2012)

A 'Rich-vs.-King' Approach to Term Sheet Negotiations

by Noam Wasserman, Furqan Nazeeri and Kyle Anderson


This note offers a new approach to venture capital term-sheet negotiations, with actionable steps based on insights from Professor Wasserman's "Rich-vs.-King" approach to founder decisions. A core thesis of this note is that trying to negotiate all terms in a term sheet will be less effective than focusing on the terms that are most important to the specific entrepreneur in question, taking into account the entrepreneur's goals and motivations in founding the venture. In particular, terms that are higher priority to a control-motivated "King" founder are often lower priority to a wealth-motivated "Rich" founder and vice versa. Thus, this note identifies the most common terms that differ in their importance to different types of founders and provides a framework for weighing the relative importance of each potential term-sheet outcome for their specific type.

Keywords: Entrepreneurship; Venture Capital; Financing and Loans; Framework; Negotiation Process; Negotiation Tactics; Motivation and Incentives; Financial Services Industry;


Wasserman, Noam, Furqan Nazeeri, and Kyle Anderson. "A 'Rich-vs.-King' Approach to Term Sheet Negotiations." Harvard Business School Background Note 810-119, March 2010. (Revised December 2012.)