Book · How the machine works
Venture Deals
Brad Feld & Jason Mendelson · multiple editions
The clearest explanation of how a venture financing actually works, written by two investors who got tired of founders not understanding what they were signing.
Why it is here
This is the single most useful book on this list for anyone about to see a term sheet. It walks through the documents clause by clause — liquidation preferences, anti-dilution, protective provisions, drag-alongs — and explains what each one does, who it benefits and what is standard.
The framing is founder-facing, which turns out to be an advantage for an angel. You are reading the explanation your founders are reading, which tells you what they will push back on, what they have been advised to accept, and where they are likely to be confused.
It is updated across editions because the market moves, so read a recent one. Where its US conventions differ from your market — and they will if you invest in the UK or continental Europe — treat it as the structural grammar rather than the local dialect.
Read it if
You have never read a term sheet, or you have read several and nodded through the parts you did not follow.
Skip it if
You only invest through syndicates and will never see the underlying documents — though even then, one read is worth the evening.
What it explains