Morgan Lewis Pitch Deck Teardown: A Legal Framework

Introduction: A Legal Framework for Founders

The Morgan Lewis presentation, 'Understanding Angel and Venture Term Sheets: A Play in Three Acts,' is a specialized document. Unlike the typical pitch decks analyzed at StartupFundraising.com, this is not a solicitation for funds. Instead, it is a 9-slide educational tool dated December 16, 2014, designed to guide entrepreneurs through the legal minefield of early-stage financing. The deck uses a narrative structure to demystify how investors and founders interact during the negotiation of a term sheet.

Slide 1: Title and Authorship

The cover slide establishes the professional nature of the deck. It is branded by Morgan Lewis, a global law firm, and identifies the presenters as William Perkins (Partner) and Jason Rodriguez (Associate). The subtitle, 'A Play in Three Acts,' suggests a narrative approach to what is usually a dry, technical subject. The date, December 16, 2014, places this deck in a post-recession era where venture capital terms were becoming increasingly standardized through efforts like the NVCA templates.

Slide 2: Cast & Setting

Slide 2 introduces a fictional scenario to ground the legal concepts. We are introduced to Jason Rodriguez , a fictional entrepreneur and engineer who has developed a product for electric cars called SpeedyCharge . The slide notes that the product 'speeds charge times by 30%-50%' and that the company needs $500,000-$750,000 to develop a beta version. The investor is Will Perkins , a lawyer-turned-angel investor. The setting is a 'local craft beer hall,' a common trope in startup culture intended to make the high-stakes negotiation feel more accessible. This slide is crucial because it sets the 'Ask' and the 'Stage' for the hypothetical deal.

Slide 3: Act I - Valuation and Structure

Act I focuses on the most immediate concerns of any deal: how much is the company worth and what is being sold? The slide lists a checklist of 'Key Terms' including:

Entity Type: LLC vs. Corporation. · Valuation: Specifically distinguishing between Pre-money and Post-money. · Instrument: Convertible notes vs. Preferred stock vs. a Priced round. · Conversion Cap: A critical component of convertible debt.

This slide omits definitions, serving instead as a roadmap for a discussion on how these factors impact founder dilution and tax structure.

Slide 4: Act II - Governance and Control

Once the price is settled, the negotiation shifts to who runs the company. Slide 4 lists terms that define the power dynamic between the founder and the investor:

Option Pool: The size of the pool usually impacts the pre-money valuation. · Vesting: Ensuring founders stay with the company. · Board Seat and Observer Rights: Determining who has a vote and who just has a 'fly on the wall' view of board meetings. · Protective Provisions: Veto rights for investors on specific corporate actions.

This section highlights that venture capital is not just about money; it is about the transfer of specific control rights.

Slide 5: Act III - The Closing Process

Slide 5 covers the 'wrapping up' phase. These are the administrative and ongoing obligations that follow the investment:

Information Rights: What financial data the founder must provide to investors. · Timing and Drafting: Who is responsible for producing the first draft of the documents. · Counsel and Expenses: A common point of contention where the startup often pays for the investor's legal fees, capped at a certain amount.

Slide 6: Act IV - The 'Hidden' Terms

Slide 6 is titled 'What didn’t come up...' and serves as a warning for founders. It lists more complex or aggressive terms that might not be discussed in a casual 'beer hall' meeting but appear in the long-form documents:

Anti-dilution: Specifically Weighted-average vs. Full ratchet. · Liquidation Preference: Mentioned here as 'Participating preferred.' · Rights of First Refusal (ROFR) and Co-sale: Terms governing how shares can be sold in the future. · Drag-along Rights: The ability for a majority to force a minority to sell in an acquisition.

Slide 7: Other Resources

This slide provides actionable value by pointing founders to industry standards. It cites the National Venture Capital Association (NVCA) and Series Seed . The inclusion of these links (nvca.org and seriesseed.com) suggests that the presenters advocate for using standardized documents to save time and legal fees, though they include a disclaimer that these are 'no substitute for a thorough discussion/translation by your own counsel.'

Slide 8: Contact Information

The penultimate slide is a standard 'Thank You' with direct contact information for Perkins and Rodriguez. The tone is inviting, stating they 'genuinely love these topics and are always happy to brainstorm.'

Slide 9: Legal Disclaimer

The final slide is a mandatory legal disclaimer. It states that the communication is a 'general informational service' and does not create an 'attorney-client relationship.' It also notes that 'prior results... do not guarantee similar outcomes' and clarifies that the photos (though none were prominently used in the slides themselves) are dramatizations. This is a standard requirement for law firm marketing materials.

What Works in This Deck

The narrative approach is the deck's strongest feature. By creating 'Jason' and 'SpeedyCharge,' the presenters turn abstract legal concepts into a relatable story. The division of terms into 'Acts' helps founders prioritize what to negotiate first (valuation) versus what to handle later (administrative rights). The inclusion of Slide 6 ('What didn't come up') is an excellent educational touch, as it prepares founders for the 'fine print' that often catches them off guard during the definitive document phase.

What Is Missing

As an educational deck, it lacks depth in its written content. There are no definitions for any of the terms listed. A founder viewing this deck without the accompanying lecture would not know the difference between a 'Full ratchet' and a 'Weighted-average' anti-dilution clause. Furthermore, there are no visual aids—such as cap table examples or diagrams—to illustrate how these terms actually affect ownership percentages. The deck is a skeleton for a speech, not a standalone guide.

What a Founder Should Copy

Founders should emulate the categorization found in this deck when preparing for their own negotiations. Organizing a term sheet into 'Valuation,' 'Control,' and 'Economics' allows for a more structured conversation with investors. Additionally, the use of a 'Key Terms' checklist is a professional way to ensure no critical points are missed during a meeting. Finally, the reference to NVCA and Series Seed documents is a best practice; founders who suggest using these templates often signal to investors that they are sophisticated and focused on efficiency.

Final Analysis

The Morgan Lewis deck is a artifact of professional services marketing. It successfully positions the firm as a helpful, expert partner for startups by simplifying a complex process into a 'Play in Three Acts.' While it offers no specific data on the 2014 venture market, its checklist remains a relevant primer for the fundamental mechanics of a venture capital deal. For a founder, this deck serves as a high-level syllabus for the topics they must master before signing their first term sheet.