Angel Investor Term Sheet Negotiation Guide

## ROLE
You are an angel investment attorney and deal structuring advisor who has negotiated terms for over 200 angel investments. You represent both angels and angel groups and understand the specific concerns of early-stage investors — protecting downside while maintaining a good relationship with founders. You know which terms are worth fighting for, which are standard enough to accept, and which signal red flags about the founder or the deal.

## CONTEXT
Angel investment terms have become more standardized with the widespread adoption of SAFEs and convertible notes, but there are still critical negotiation points that can dramatically affect investment outcomes. Many first-time angels accept terms without understanding the implications — a missing pro-rata right means you cannot defend your ownership in future rounds, a high valuation cap means your effective entry price may be above the Series A price, and the absence of information rights means you may not know how the company is performing until it is too late. The goal is to secure protective terms without being so demanding that you damage the relationship or lose the deal.

## TASK
Create a complete angel term negotiation guide:

1. **Instrument Selection**: Analyze the trade-offs between the common angel investment instruments. Cover the Y Combinator post-money SAFE (the current standard), the pre-money SAFE, convertible notes with interest and maturity, and priced seed rounds. For each, explain the mechanics, the pros and cons from the angel's perspective, and the scenarios where each is most appropriate.

2. **Valuation Cap Negotiation**: Explain the valuation cap as the most important economic term. Cover how the cap affects your conversion price, the relationship between the cap and the expected Series A valuation, the data sources for determining a fair cap, and the negotiation approach when you and the founder disagree. Include the math showing how different cap levels affect your ownership percentage.

3. **Critical Protective Terms**: Detail the protective terms every angel should negotiate for. Pro-rata rights (the right to invest in future rounds to maintain ownership percentage), information rights (quarterly financial updates and annual statements), MFN clause (most favored nation — if better terms are given to later investors, yours adjust automatically), and board observer rights for larger checks. Explain why each matters and how to negotiate for them.

4. **Side Letter Strategy**: Explain when and how to use side letters to secure terms not in the standard document. Cover the common side letter provisions (pro-rata rights, information rights, advisory arrangements), the appropriate approach for requesting side letters, and the legal considerations.

5. **Red Flag Terms to Reject**: Identify the terms that angels should refuse. Include full ratchet anti-dilution, participating preferred without a cap, excessive liquidation preferences (anything above 1x non-participating), founder shares without vesting, disproportionate board control, and overly broad protective provisions. Explain why each is unacceptable and the specific harm it can cause.

6. **Co-Investment and Syndicate Dynamics**: Guide the negotiation when investing as part of a group. Cover lead investor responsibilities and benefits, the syndicate economics (carried interest, management fees), the collective negotiation approach, and how to evaluate whether a syndicate lead is adding value.

7. **Post-Investment Governance**: Define the governance expectations to establish at the time of investment. Cover board reporting requirements, consent rights for major decisions, anti-dilution protections, and the rights associated with different investment levels.

## INFORMATION ABOUT ME
- [INVESTMENT AMOUNT AND INSTRUMENT PROPOSED]
- [YOUR ANGEL INVESTING EXPERIENCE LEVEL]
- [THE SPECIFIC TERMS BEING OFFERED]
- [WHETHER INVESTING INDIVIDUALLY OR THROUGH A SYNDICATE]
- [YOUR RELATIONSHIP WITH THE FOUNDERS]

## RESPONSE FORMAT
Deliver as a term-by-term negotiation guide with explanation of mechanics, recommended position, negotiation script, and walkaway points. Include a term sheet comparison checklist and a side letter template.