Venture Deals by Brad Feld and Jason Mendelson, first published by Wiley in 2011, is a guide to how venture capital financing works from the inside. Both authors are experienced venture investors at Foundry Group, and the book grew out of a series of blog posts Feld wrote in the mid-2000s to demystify term sheets for founders. It has gone through four editions, the latest in 2019.
What is Venture Deals about?
The book starts from an uncomfortable fact: in most first rounds, the investor has read hundreds of term sheets and the founder has read none. Feld and Mendelson want to close that gap. They walk through a standard term sheet clause by clause and explain, in plain words, what each one does, why investors ask for it and what a reasonable middle ground looks like.
Their organising idea is that the clauses fall into two buckets. Economic terms decide who gets how much money when the company is sold: price, liquidation preference, participation, the employee option pool, anti-dilution protection and vesting. Control terms decide who gets to make decisions: board seats, protective provisions that give investors a veto, drag-along rights and conversion rules. Almost everything else is detail you can let your lawyer handle.
Around that centre, the book covers the people at the table (angels, venture partners, lawyers, mentors), how a venture fund is structured and paid, convertible notes and their caps and discounts, negotiation tactics, and the letter of intent you will see if someone wants to buy your company. Later editions added material on newer funding options and on how deal terms shifted over the decade.
What are the main lessons for founders?
- Look past the valuation headline. A high price with a heavy liquidation preference and a large option pool carved out before the round can leave founders with less than a lower, cleaner offer.
- Guard control as hard as money. Board composition and investor vetoes shape every later decision, from hiring a new CEO to accepting an acquisition offer.
- Know how your investor gets paid. Funds earn fees and a share of profits on a fixed timeline. That timeline explains their appetite for big outcomes and their pressure on exits.
- Create real alternatives. The best negotiating position is a second interested investor. Without one, you are mostly asking for favours.
- Keep the relationship intact. You negotiate the deal once and then sit on a board with that person for years. Win on the terms that count and concede gracefully on the rest.
Who should read Venture Deals?
Read it before you send your first investor email, and again before you sign a term sheet or a convertible note. It fits founders of startups that plan to raise from angels or venture funds, early employees who want to understand their options, and new angel investors learning the other side. Lawyers and accountants who advise startups also use it as a reference.
You can skip it if you are bootstrapping with no plan to sell equity, or if you fund the company through grants and customer revenue only.
How do you put Venture Deals to work this week?
- Take a standard seed term sheet template and mark each clause as economics or control. Highlight anything you cannot explain in one sentence.
- Build a simple table showing what you, your co-founders and employees would receive at three exit prices under a 1x non-participating preference versus a participating one.
- Ask two founders who raised recently which terms surprised them, and write down the questions to ask your own lawyer.
The free Investor Playbook module in the Fe/male Switch Startup School walks you through finding, pitching and talking to investors before a term sheet arrives.
Where does Venture Deals fall short?
The book reflects a US, Silicon Valley-style deal. Founders in Europe, Asia or Africa face different legal structures, tax rules and investor norms, and the book gives limited help translating them. It also assumes venture capital is the right path and spends little time on whether you should raise at all. The authors write as investors, so their view of fair terms leans that way. For the human side of founder choices, read The Founders Dilemmas, and for the exit end of the deal, read Exit Path.