Artemis Warrior Guide: How to Optimize Your Series A Fundraise, Part 2

November 4, 2025

By The Artemis Fund
The Artemis Fund believes technology can create prosperity for all. With offices in New York, Texas, Massachusetts, and Nevada, Artemis leads seed rounds for companies creating resilient families, individuals, and businesses across the US.
When you’re fundraising, securing a term sheet is not the finish line. It’s where long-term alignment begins. In Part 1 of this Warrior Guide, we covered how to run a disciplined fundraising process: building a pipeline of aligned investors, crafting your narrative, and creating a data room that builds confidence early.
Now we’re stepping into the negotiation room. Term sheets, board structure, and protective provisions: this is where your vision meets structure, and how you handle it will shape every round that follows.

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What Does “Clean” Actually Mean?
When investors talk about a “clean” term sheet, they mean one that aligns incentives, avoids unnecessary complexity, and sets your company up for long-term scale. A clean structure is easier to negotiate, sends strong signals to future investors, and reduces friction in your next raise. Y Combinator’s Series A template is a great example: minimal legalese, no padded terms, and early alignment on control and economics.
Term sheets define who controls what, when, and how. If your Series A is stacked with overly protective provisions, that complexity compounds in every future round, making your company harder to fund, govern, and exit.
Tem sheet red flags to watch for:
High liquidation multiples (e.g., 2x or more)
Participating preferred stock without a cap
Super pro-rata rights or large reserved allocations
Board control shifting entirely to investors
Unilateral vetoes or consent rights buried in protective provisions
If you see layered preferences, control tilting away from founders, or unusual investor protections, pause and ask yourself: Are these terms aligned with scaling the business, or just protecting downside risk for the check writer?
Valuation & Option Pool: Don’t Just Chase the Headline Number
Founders often anchor on pre-money valuation, but that number can be misleading if you don’t understand how the option pool refresh is calculated. Most Series A investors will require a refreshed option pool to cover future hires (usually 10–15%), but whether it’s calculated pre-money or post-money makes a huge difference in your dilution.
If the refresh is calculated pre-money, the pool is created out of your ownership, not the investors’. A $20M pre-money valuation with a 15% pool refresh pre-money effectively values your company at $17M, before you even see a dollar.
What to do:
Push for a post-money option pool refresh, or negotiate the smallest possible refresh based on realistic hiring plans
Model your cap table fully diluted, before and after the round
Ensure the hiring plan supports the pool size the investor is proposing
Liquidation Preferences: Protecting the Downside or Diluting the Upside?
Liquidation preferences determine who gets paid first, and how much, in a liquidity event. They’re designed to protect investors’ downside, but depending on the structure, they can materially reduce what founders and employees receive.
The market standard is 1x non-participating preferred, meaning the investor chooses between:
Getting their original investment back (e.g., $5M on a $5M check), or
Converting to common stock if that yields a better return.
But some term sheets introduce participating preferred, where the investor gets their money back and a pro-rata share of the remaining proceeds, like a double-dip. Others add multiples (e.g., 2x or 3x), requiring the company to return 2x the invested amount before common shareholders see anything.
Why this matters: In a $50M exit with $20M invested, a 2x participating investor could walk away with $40M, leaving little for founders or the team, even if the company performed well.
What to do:
Push for 1x non-participating preferred
If participation is non-negotiable, negotiate a cap (e.g., 2x max return)
Model exit waterfalls across different exit values (e.g., $30M, $50M, $100M) to see how proceeds would flow
Anti-Dilution, Pro-Rata, and Voting Rights
Anti-Dilution Protections
These protect investors in a down round. Weighted-average is standard and adjusts share prices based on the size and pricing of the new round. Full ratchet is more aggressive, treating the entire investment as if it were made at the lower price.
What to do:
Negotiate for weighted-average, not full ratchet
Understand how anti-dilution affects the whole cap table
Ask your counsel to model outcomes in various scenarios
Pro-Rata Rights
These let investors maintain ownership in future rounds. Good for your lead and strategic backers, but if overextended, they can block room for new investors.
What to do:
Limit to your lead and high-value investors
Avoid super pro-rata rights
Cap total allocation for pro-rata
Voting & Protective Provisions
These govern decisions like raising more capital, selling the company, or changing the option pool.
What to do:
Ensure protections require a majority, not unanimity
Define clearly what’s board-approved vs. stockholder-approved
Watch for hidden vetoes or consent rights in investor docs
Board Composition: Build for Alignment, Not Bureaucracy
The board sets your governance and decision-making culture. At Series A, we recommend no more than 5 members at the table:
CEO (typically a founder)
1 common rep (co-founder or operator)
1 seed investor
1 Series A lead
1 independent
This structure ensures a balance of founder voice, investor alignment, and one seat for operational perspective. You can read more about how Artemis approaches board governance here.
What to do:
Choose an independent with real functional depth (not just prestige)
Clarify observer vs. voting rights across your cap table
Set early norms for how your board supports (not just oversees) the business
Run a Disciplined Close
Once term sheets are in, process matters more than pitch.
Be diligence-ready: Use Artemis’ checklist, YC’s checklist, or Visible’s data room guide to get organized.
Maintain momentum: Stalling kills deals. Define timelines, preempt red flags, and keep lines open with your lead.
Set the tone: This round is the foundation for all future governance and funding. The more you lead here, the smoother your path will be later.
Negotiate with Intent
You don’t have to play hardball to protect your long term vision. Here’s what you should focus on:
Secure the Right Counsel Early: A seasoned VC attorney helps you understand the downstream implications of every term.
Know What’s Market (And What’s Not): Use benchmarks from YC, NVCA, Carta, or SeedLegals to calibrate. If a term feels off, it probably is.
Prioritize & Preserve Leverage: Not every term is equally important. Focus on valuation, dilution, governance, and liquidation.
Manage Time and Momentum: Term sheets often come with short deadlines and exclusivity windows. Ask for more time if you need it, but don’t lose momentum.
Play the Long Game: Negotiations set the tone for the investor relationship. Be firm, fair, and transparent. The best outcomes come from clarity, not combat.
The structure you set now will echo in every board meeting, follow-on round, and negotiation to come, so negotiate like the founder your future board (and self) will thank.
We believe once in a generation companies will be built by unexpected founders. If that sounds like you, pitch us here!

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