"I met a founder in Singapore who was crying. I asked why. He had received a term sheet that was onerous on both economic and control rights. More importantly, it was an exploding term sheet that had to be signed immediately or it would be withdrawn. He called his lawyer, who told him not to sign, but he did anyway because he felt there was no alternative. The next day, he regretted it. He could not sleep. From a founder’s perspective, that is deeply sad. From a VC perspective, you have to respect the investor, because they effectively secured the company at about half the price." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast


"Is my company worth this much? Egos often get in the way. I know a startup that had an opportunity to raise money at a price that was effectively flat to the prior round. The prior-round investor refused to sign, vetoed the deal, and pushed for a higher valuation. The company failed to close the capital and died about a year later. This shows the dynamic where, as an incoming VC, you are negotiating not just with the founder, but also with the board and early shareholders." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast


"Another important issue is control rights. When someone asks for a high valuation, you can trade valuation for control rights to manage risk. These rights shape governance between founders, management, early shareholders, and later shareholders. They matter more than many founders realize. Over time, control disputes have destroyed many companies." - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast

Jeremy Au breaks down how venture capital deals really close, why many fail after the term sheet, and how financial and control rights shape outcomes for founders and investors over a 10-year relationship. Drawing from real cases across Southeast Asia, he explains the hidden trade-offs behind valuation, governance, and trust, and why “good economics” can still destroy long-term value if handled poorly.

01:00 Due Diligence and Deal Risk: How reference checks, audits, and legal reviews can still miss fraud and derail trust.

03:30 Trust as a 10-Year Decision: Why fundraising is not just about price, but about choosing a long-term partner.

04:45 Valuation Disputes and Ego: How founders and VCs clash over worth, and why bad negotiations quietly kill companies.

09:00 Valuation vs. Hidden Clauses: How high headline valuations are offset by liquidation preferences and anti-dilution terms.

15:30 Exploding Term Sheets and Founder Regret: A case where aggressive terms improved investor economics but destroyed founder trust.

Jeremy Au: The deal process, startup failure patterns, and value creation. I think this is quite an interesting topic because we’re looking at it both from the founder’s perspective, but really from the VC fund strategy perspective. I just want to remind everyone that this is primarily from a VC perspective.

We’ll talk about deals, and what’s really important is that just because you find and select a great deal doesn’t mean the deal is closed.

What you need to do next is issue a term sheet, which is a non-binding statement of key economic terms, permissions, and control rights. Then you negotiate with the founder, persuade them that it’s a good deal, and eventually sign the deal on both sides.

That’s the term sheet stage. In parallel, you then start working with lawyers. This is where the lawyers come in and begin converting the term sheet into a long-form investment contract. There are several documents associated with that process.

At the same time, the VC will also be conducting due diligence. This process can take two to three months for documents to be negotiated. The devil is in the details. In parallel, there will be a due diligence component, which may include reference checks on the founder.

For example, in the eFishery case, sovereign wealth funds reportedly sent people to visit farms to audit whether farmers were actually using the product. Of course, in that same case, it was later revealed that the eFishery team allegedly conducted fraud by selectively visiting certain farms and coaching them on what to say about the company.

This is what due diligence is meant to uncover: gaps, inconsistencies, or potential fraud between the initial analysis and reality.

Eventually, you sign the long-form subscription documents, which encapsulate all final agreements. Importantly, not only do the founders sign, not only do the new investors sign, but all prior investors must sign as well.

Once everyone signs, capital is wired.

(02:06) Just two weeks ago, one of my portfolio companies messaged me saying, “Jeremy, you’re the last signature. If you don’t sign, the round won’t go through.”

I replied, “Hey buddy, you told me about this document yesterday over WhatsApp, but it turns out it went to my spam folder.” I hadn’t seen it for about a week and a half. We immediately fast-tracked our lawyers to review it, and once that was done, we signed quickly. The round closed smoothly.

But from his perspective, he was extremely anxious. He knew that if I didn’t sign, the entire round could fall apart. Other investors might pull out. It’s a high-stakes process.

In the worst case, it becomes a circular firing squad. In the best case, it’s a well-mobilized effort. Either way, it’s exhausting.

(03:12) These are the things VCs have to do to eventually close a startup investment. From a VC perspective, it’s incredibly important to build trust in this process. You’re writing an investment that you’re going to hold for ten years.

If things go right, and one out of forty founders becomes a unicorn, that founder can become your biggest champion. But if they’re one of the other thirty-nine, they can bad-mouth you to every founder and every VC in the ecosystem.

You’ll see articles where founders publicly name and shame VCs they had bad experiences with. That reputational impact is real.

Many founders are inexperienced. This is their first time raising institutional capital. Educating while negotiating is extremely important.

Second, VCs generally try to keep term sheets simple rather than complex. Complexity is not helpful. If a founder receives two term sheets—one they understand and one they don’t—they will choose the one they understand.

Remember, VCs are always competing. If you’re investing in a strong startup, that founder likely has multiple term sheets.

(05:00) Third, valuation disagreements are inevitable. Founders always think their company is worth more. VCs argue it’s worth less. Negotiating this calmly is critical—and very difficult.

I know of a startup that had the opportunity to raise capital at a flat valuation. A prior investor vetoed the deal, insisting on a higher valuation. The company failed to raise capital and shut down a year later.

As an incoming VC, you’re not only negotiating with the founder but also with board members and early shareholders. Everyone prefers a higher valuation, but expectations are often unrealistic.

Finally, VCs must balance control rights with founder autonomy. Too much control stifles execution; too little invites risk.

In Indonesia, many VCs initially applied light-touch US-style governance. After multiple fraud cases, they increased control rights—observation rights, information rights, veto rights. Founders now complain they no longer control their own companies.

There’s an awkward balance here, and it’s very difficult.

(07:12) At a high level, there are two categories of terms: financial rights and control rights.

Financial terms determine how proceeds are distributed in great outcomes, mediocre outcomes, and failures. This is often referred to as the liquidation waterfall.

Key terms include pre-money versus post-money valuation, check size, and price per share. Price per share is formulaic, yet I’ve seen top-tier law firms get it wrong repeatedly. Always insist that pricing is defined via formulas and supported by spreadsheets.

Next is the employee option pool—equity reserved to reward future talent.

Liquidation preferences define who gets paid first in downside scenarios. In many exits, founders and employees receive nothing.

Anti-dilution clauses protect early investors, but these rights compound across rounds. Ultimately, founders and employees bear the dilution.

Founders often fixate on valuation, but VCs adjust other levers—anti-dilution, liquidation preferences, control rights—to reach their desired economics.

(12:58) Control rights govern how decisions are made. They are often underappreciated by founders and deeply valued by lawyers.

Governance should maximize upside while avoiding harm. Over-lawyering can destroy execution velocity. I’ve seen investor-friendly governance structures that protect downside but cripple founders.

Key control terms include board composition, protective provisions, founder vesting, no-shop clauses, rights of first refusal, and drag-along rights.

Drag-along rights prevent minority shareholders from blocking exits. These terms typically benefit larger or later-stage investors.

(18:06) I once met a founder in Singapore who was crying. He had signed an exploding term sheet with highly onerous economic and control terms against his lawyer’s advice. He felt he had no alternative.

From the VC’s LP perspective, the deal was brilliant—the VC effectively bought the company at half price. But from a founder perspective, trust was destroyed.

In the US, this behavior would be considered unacceptable. Platforms like Y Combinator and Tech in Asia allow founders to rate VCs for predatory behavior. Reputation matters.

The answer lies somewhere in between. Aggressive terms may boost short-term economics but destroy long-term value.

That’s the tension every VC must think through when structuring a deal.