198 Raising Capital (such as the supplemental debt financing that a growing company may seek prior to closing). You'll find a sample term sheet in the appendix. Evolution of Venture Capital Deal Terms As discussed later in this chapter, typical deal terms for venture capital invest- ments have evolved significantly over the past several years. In the heyday of 1998 and 1999, term sheets were drafted pretty heavily in favor of the entre- preneurs and the founding team, as venture capitalists were often competing with five or six (or more) other firms to be the source of Series A financing. By 2002, the pressures on the venture capitalists from their own investors, eco- nomic conditions, and the need to protect the downside (as companies were failing left and right) led the "deal terms pendulum" to swing all the way to the other side in favor of the source of capital. By mid-2004, market conditions were slowly improving, and venture capital deal terms began to normalize and reflect a relatively typical private equity environment. By 2008, and continuing through much of 2010, the near disappearance of debt financing in the market led to a lack of exit opportunities for venture capital firms. In 2011, there has