Morgan Lewis Pitch Deck Teardown: A Theatrical Guide

Introduction: The Narrative Approach to Legal Education

The presentation titled "Understanding Angel and Venture Term Sheets: A Play in Three Acts," delivered by Morgan Lewis on January 21, 2016, is a pedagogical deck designed to educate founders on the legal mechanics of fundraising. Unlike a standard pitch deck that seeks capital, this deck seeks to explain the process of securing it. The authors, William Perkins and Stefan Lefebvre, use a fictional narrative to ground abstract legal concepts in a relatable scenario.

Slide 1: Title and Presenters

The cover slide establishes the theme: "A Play in Three Acts." It identifies the presenters as William Perkins, a Partner, and Stefan Lefebvre, an Associate at Morgan Lewis. The date, January 21, 2016, provides a temporal context for the legal standards discussed. The background features a skyline illustration of various global cities, signaling the firm's international reach.

Slide 2: The Cast and the Case Study

This slide introduces the fictional characters and the business case. Stef Lefebvre is cast as the Entrepreneur, a former business development professional at a large tech company. His startup, SpeedyCharge , has developed a prototype that claims to speed up electric car charging by 30%-50% . The slide explicitly states the funding ask: $500,000 to $750,000 to develop a beta version. Will Perkins is cast as the Angel Investor, a lawyer by training who invests with a group of friends. This setup establishes the stakes for the subsequent "Acts."

Slide 3: The Setting

The narrative setting is established here. The entrepreneur and investor have already had a teleconference to review the pitch deck and business model. The current meeting takes place at a "local craft beer hall" to negotiate terms. This slide serves to transition from the business pitch to the legal negotiation, emphasizing that terms are often settled in less formal environments before being codified by lawyers.

Slide 4: Act I – Valuation and Structure

Act I focuses on the foundational elements of a deal. The slide provides a checklist of "Key Terms" that are typically the first to be negotiated:

Entity Type: LLC vs. Corporation. · Parties: Founders. · Valuation: Pre-money vs. Post-money. · Instruments: Convertible notes vs. Preferred stock (Priced round). · Mechanics: Cap table and Conversion cap.

The slide is intentionally sparse, acting as a prompt for a verbal presentation rather than a dense information source.

Slide 5: Act II – Governance and Control

Once valuation is settled, the negotiation moves to how the company will be run. Act II lists terms related to control and future rights:

Option Pool: The percentage of equity reserved for future employees. · Vesting: The schedule by which founders and employees earn their shares. · Rights: Pre-emptive rights (the right to participate in future rounds) and Blocking rights. · Board Composition: Board seats and Observer status. · Protective Provisions: Veto rights for investors on specific corporate actions.

Slide 6: Act III – Closing and Administration

The final act of the primary negotiation covers the logistics of finalizing the deal. The checklist includes:

Information Rights: What financial data the investor is entitled to receive. · Timing and Drafting: The schedule for closing the round. · Counsel and Expenses: Who pays the legal fees for the transaction.

Slide 7: Act IV – The Omitted Terms

Act IV is titled "What didn’t come up..." and lists more complex or aggressive terms that might not be discussed in an initial beer-hall meeting but will appear in the final documents. These include:

Dividends: Payments to preferred shareholders. · Liquidation Preference: Participating preferred vs. non-participating. · Anti-dilution: Weighted-average vs. Full ratchet. · Exit Rights: Right of First Refusal (ROFR), Co-sale, and Drag-along rights. · Registration Rights: Rights related to future public offerings.

Slide 8: External Resources

Morgan Lewis provides two primary resources for founders to find model documents: the National Venture Capital Association (NVCA) at nvca.org and SeriesSeed.com . The slide notes that Series Seed documents are "venture-lite" and designed for simplicity in early rounds. It concludes with a disclaimer that these models are not a substitute for actual legal counsel.

Slide 9: Contact Information

A standard closing slide providing the email addresses and phone numbers for William S. Perkins and Stefan P. Lefebvre. It includes a call to action: "Call us! We genuinely love these topics."

Slide 10: About Morgan Lewis

This slide provides firm credentials as of 2015/2016. Key facts include:

Founded in 1873. · Over 2,000 lawyers. · 28 offices across the US, Europe, Asia, and the Middle East. · Clients include more than half of the Global 25 and 80 of the Fortune 100. · Ranked by Chambers, Legal 500, and Law 360.

Slide 11: Global Presence Map

The final slide is a map showing the firm's office locations. It lists specific cities in Asia (e.g., Tokyo, Singapore), Europe (e.g., London, Paris), the Middle East (Dubai), and North America (e.g., Silicon Valley, New York, Boston). This visual reinforces the firm's ability to handle cross-border transactions.

What Works in This Deck

The use of a narrative framework is highly effective for a legal presentation. By creating the characters of Stef and Will, the presenters transform dry legal checklists into a story about a relationship. This helps founders understand that a term sheet is not just a document, but a set of rules for a long-term partnership.

The segmentation of terms into "Acts" provides a logical flow. Act I handles the "what" (valuation), Act II handles the "how" (governance), and Act III handles the "when" (closing). This structure mirrors the actual psychological flow of a negotiation, where parties agree on the big numbers before diving into the minutiae of board seats or information rights.

The inclusion of Act IV is a clever way to address "hidden" terms. Many founders focus exclusively on valuation and are blindsided by liquidation preferences or anti-dilution clauses in the final definitive agreements. Highlighting these as things that "didn't come up" in the initial meeting serves as a warning to be diligent during the drafting phase.

What Is Missing

As a pedagogical tool, the deck is successful, but as a standalone resource, it lacks definitions . A founder reading this deck without the accompanying lecture would see the term "Full Ratchet" or "Weighted-average" but would have no explanation of the difference or the impact on their equity. The deck relies entirely on the speaker to provide the substance behind the bullet points.

There is also a lack of market benchmarks . While the deck lists the terms to be negotiated, it does not provide 2016-era data on what was "standard." For example, it does not mention that a 1x non-participating liquidation preference was the market norm, or what a typical option pool size looked like for a $750,000 seed round. This forces the reader to look elsewhere for the "market" price of these terms.

What a Founder Should Copy

Founders should emulate the checklist approach found in Slides 4, 5, and 6. When preparing for a negotiation, having a categorized list of terms—Valuation, Governance, and Administration—ensures that nothing is forgotten in the heat of the moment. It allows a founder to track which points have been conceded and which are still open.

The resource slide (Slide 8) is another element to copy. When presenting to investors or partners, providing links to industry-standard documents (like the NVCA templates) shows that the founder is sophisticated and intends to follow established market norms rather than trying to reinvent legal structures. This builds trust and can speed up the due diligence process.

Finally, the case study method (Slide 2) is a powerful way to explain complex products. If a founder is pitching a highly technical product, framing it through a simple use case—like the "wall plug to car charging port" description for SpeedyCharge—can make the value proposition immediately clear to non-technical investors.