Financing Term Sheet Deep Dive: Participation Rights

Whether you’ve only recently decided to seek out capital for your business or you’ve already received (or made) your first offer, the term sheet (or “letter of intent”) is an integral part of the process.  

In this series we’ll look to shed some light on the legal language contained in that term sheet by taking a “deep dive” into the most often used terms and how choices made in selecting those terms can affect both Company and Investor.  Check out an overview here.

Financing Term Sheet Deep Dive will be published each Monday morning until conclusion. For more information, check out or drop Rick a line at


As we get closer to the end of our “Financing Term Sheet Deep Dive” Series (only a few weeks left!) the rights and responsibilities at issue are generally less contentious.  That doesn’t mean that they aren’t important, or that they don’t affect the Company and its Investors.  It does mean, however, that the contours of the rights are a bit more “expected”; that there is, perhaps, a bit less to negotiate.

Today we discuss one of those “less contentious” rights: the right to “participate” in future equity sales of the Company.

Let’s take a closer look.

Continue reading “Financing Term Sheet Deep Dive: Participation Rights”