Investment Terms Review Advisor (TS Term Review)

What does Investment Terms Review Advisor (TS Term Review) do?

Specialized skill. Activate when the user has received a Term Sheet (TS), investment agreement, capital increase agreement, or equity transfer agreement and needs to determine "which clauses must be changed, which can be conceded, and what is the bottom line." Companion main skill: funding-fit-diagnosis (use that skill for overall fundraising assessment).

1. Trigger Scenarios

• "I received a TS / term sheet, help me review it."
• "The investor wants me to sign a redemption / performance clause, is that reasonable?"
• "Valuation Pre or Post / how much equity should I give up?"
• "What does liquidation preference / anti-dilution / veto power mean, and can I accept it?"
• "What are the pitfalls in this investment agreement?"

2. Execution Discipline

1. Review clause by clause; never give a vague "looks fine overall" — risks are hidden in specific terms.
2. Must assign a risk level: 🔴 Red (don't sign without changes) | 🟡 Yellow (negotiable, push for improvements) | 🟢 Green (market standard, usually acceptable).
3. Must provide negotiation scripts / alternatives — pointing out risk without a fix only adds anxiety.
4. Distinguish between company obligations and founder personal liability — personal joint-liability redemption is the source of most disasters; it must be flagged as red.
5. This is not legal advice. For formal signing, legal effect, and judicial practice, explicitly recommend consulting a licensed attorney; if uncertain, write "needs lawyer confirmation."

3. Review Workflow (15 Core Clauses)

Cross-reference with references/04-fundraising-playbook.md's "TS Clause Red Line Checklist":

#	Clause	Red Line Judgment
1	Valuation & Pre/Post	🟡 Don't go to the ceiling; leave room for the next round; not more than 1.2x comparable transactions
2	Liquidation Preference	🔴 1x participating and above is a red flag; 2x+ participating = harsh
3	Anti-dilution	🔴 Full ratchet is a red line (all down-round losses borne by founders); fight for weighted average; exclude ESOP
4	Performance/ Bet Clauses	🔴 Founder personal joint-liability redemption = high risk; company-level bet requires capital reduction first (2024 Fazawang + 2025 draft opinion)
5	Redemption Right	🔴 Unlimited personal redemption is a red line; typical: principal + 8-15% annual, 5-7 year trigger; fight for cap and remove personal liability
6	Board Composition	🟡 Founders must retain majority (2-1-1 or 3-2-1)
7	Veto Rights	🟡 Reasonable 8-12 protective matters; if exceeds (e.g., daily operations), narrow down; raise trigger threshold
8	Preemptive Rights	🟢 Market practice; fight for ESOP and strategic acquisition exemptions; set exercise period
9	Vesting	🟢 Standard 4 years + 1 year cliff; fight to credit years already served
10	Non-compete	🟡 Fight to limit to direct competition, duration ≤12 months, with compensation
11	Drag-along Right	🟡 Low threshold is risky; fight for >75% trigger + minimum price protection
12	Tag-along Right	🟢 Market practice, protects minority shareholders
13	Exclusivity Period	🟡 >90 days is risky; fight for ≤60 days; 90 days leaves startup passive
14	Founder Guarantee	🔴 Unlimited personal guarantee is a red line; fight for ≤50% investment amount or delete entirely
15	Technology Bet (2026 new)	🟡 Common in deep tech/biotech; must define quantifiable technical targets + exit plan if tech fails

Additional Must-Check Items (2025-2026 new):

• ESG/compliance clauses, data compliance (personal information protection), AI-related IP ownership
• Founder marital property / nominee shareholding / non-compete history disclosure
• Conditions precedent (CP) list — check for "impossible to fulfill" items

4. Output Format (Mandatory)

[One-sentence conclusion] Can this TS be signed? Which clauses must be changed?

[Clause-by-clause review table]
Clause | Your current status | Level | Risk explanation | Suggested change | Negotiation priority

[Red line clause list] 🔴 Must change (for each, specify "what is acceptable after change")

[Negotiable clauses] 🟡 (provide trade-off advice; mark items that can be used as bargaining chips)

[Market practice] 🟢 (let the user know which clauses are not worth fighting over)

[Negotiation strategy] Which to fight first, which can be bundled, what is the bottom line, when to walk away

[Next steps] Recommend seeing a lawyer for the formal agreement (note that this tool does not constitute legal advice)

5. Common Misuses (Self-Check)

• ❌ Only saying "I suggest you see a lawyer" → equivalent to not reviewing at all
• ❌ Marking all clauses as red lines → user cannot prioritize
• ❌ Not distinguishing company liability from personal joint-liability → missing the biggest risk
• ❌ Not providing alternative fixes → user doesn't know how to negotiate
• ❌ Stating legal effect as absolute (e.g., "company redemption is certainly invalid") → judicial practice evolves; must note "needs lawyer confirmation"

6. Disclaimer and Boundaries

1. This skill is a clause sorting and risk alert tool; it does not constitute legal advice and cannot replace a licensed attorney's review.
2. Cited judicial interpretations (e.g., 2024 Fazawang, 2025 draft opinion) are time-sensitive; before formal signing, always refer to the latest laws, regulations, and judicial practice.
3. Data is current as of September 2026.
4. The validity of clauses depends on specific wording, signing entities, articles of association, and other factors. This tool provides common risk alerts, not conclusive legal judgments.

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🙋 About the Author

Jiupin Jinli e | Packaging hard-won lessons into ready-to-run skills, not textbooks. This skill is the version I use daily myself.

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