Trust, but Verify That Investor Term Sheet

Whatever side of the political fence you prefer, former Pres. Reagan’s quote, “Trust, but verify,” is not only a clever adoption of a Russian proverb, it also provides good advice for company founders who are reviewing an investor’s term sheet. An investor agrees to put money into your company. He’s a nice guy, maybe you met him at a wedding or he’s your new brother-in-law. Either way, you can trust him, right? Don’t they call those guys ‘angels?’ Whether he’s an angel investor or a venture capitalist and a wonderful relative, ‘trust, but verify.’