I have a few questions about promised milestones to investors.
- Is it common to include very specific milestones in the term sheet?
- What are the consequences if you fail to meet them? Losing Board seats?
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I have never seen term sheets which contain specific milestones like this, but if they did, they would have to also specify the specific consequences of failing to meet them.
A term sheet is just an abbreviated version of what will become a contract, intended to help both sides negotiate the terms of a complicated contract in a concise and simplified form. It would be nonsensical for a contract to specify a milestone without stating what the consequences are of failing to meet it.
In Brazil, where I live, we have never been asked for detailed milestones. When negotiating we had to have a 5-year plan with revenue and profit projections and a high-level product roadmap.