Running the raise

An equity round has a familiar choreography — partner meetings, a price, a close. A debt raise has choreography too; it's just that nobody teaches it, so most founders improvise. Improvising costs you basis points at best. At worst it costs you a quarter of exclusivity with the wrong lender.

Here's the process, designed.

Write down what you want before anyone tells you what you can have

Before the first term sheet arrives, write a one-page grid of your target terms. Not aspirations — specific numbers with reasoning:

• Advance rate: target and floor ("we want 85% stepping to 90% at scale; we walk below 75%")
• Pricing: spread target, maximum acceptable benchmark floor
• Facility size: committed amount you can actually deploy (Part 7)
• Fees: which ones you'll accept, which you won't ("no unused fee" or "no draw fee" — pick your battles)
• Warrants: your number (possibly zero — it's achievable more often than you'd think)
• Guaranty: how much recourse, at what perimeter
• Prepayment: the no-call length you can live with
• Draw window and mechanics
• The dealbreakers: terms you will not sign at any price

This document does three jobs. It forces the internal argument before you're negotiating under deadline. It turns incoming sheets into a fill-in-the-blanks comparison instead of a vibes contest. And it gives you the negotiating superpower of specificity — "we need the floor at 2.5% and the no-call at 18 months" gets engagement; "can you sharpen your pencil" gets nothing. In my experience, asks that are written down, specific, and reasoned get answered. Vague discomfort gets boilerplate.

Appendix A has the grid template, with a "what we want" column built in. Fill that column in first. I will die on this hill.

Run an auction, even a small one

The goal is multiple term sheets landing in the same two-to-three-week window. Not because you'll grind every lender against every other on every line — but because competition changes the defaults. A lender who knows they're alone writes their standard sheet. A lender who knows there are two others in the room writes their competitive sheet. Those are different documents.

Practical sequencing: start 8–12 lender conversations, expect half to die at first diligence (wrong asset class, wrong size, wrong stage), run 4–6 serious processes, land 2–4 sheets. Stagger your kickoffs so diligence timelines converge — lenders move at wildly different speeds, and a sheet that arrives six weeks after the others is a sheet you can't use.

Where do the 8–12 come from? Warm intros beat cold outreach here even more than in equity — your equity investors, other lending founders (ask who else term-sheeted them, not just who they chose), specialized debt advisors, and the credit funds' own BD people, who are genuinely findable at industry events. Fit dimensions to screen for early, before anyone spins up diligence: check size range, asset-class familiarity, stage tolerance, and speed.

And the same deal will come back looking wildly different. Don't let it rattle you — that's normal, and it's information. Four lenders looking at the same book will price the same risk hundreds of basis points apart, structure advance rates on completely different mechanics (Part 5), and ask for completely different equity kickers. The dispersion tells you what each lender is actually underwriting — and what they're worried about. Read the sheets as X-rays of the lender.

The binding parts of "non-binding"

Every term sheet says "non-binding" at the top, and each contains two or three clauses that bind immediately. This is where process design gets real.

Exclusivity / no-shop. Standard sheets demand 60–120 days of exclusivity on signing: you can't solicit, negotiate, or accept competing debt proposals — sometimes you must actively terminate existing discussions. Three implications. First, signing a sheet ends your auction — all remaining negotiating leverage must be spent before signature, which is the entire thesis of Part 8. Second, exclusivity windows stack badly: sign two overlapping sheets and you're in breach of one of them. Sequence deliberately. Third, the length is negotiable — a lender who needs 120 days to close is telling you something about their process; push for the shortest window that's honest, and add an automatic expiry if they haven't delivered documents by a date.

Deposits and work fees. Expect asks like: a legal deposit ($25–75k, notionally refundable-if-unused), a diligence deposit (often non-refundable), or a chunkier "work fee" payable at signature. The scary versions: fees that are "fully earned upon receipt," expense reimbursement obligations that survive even if the deal never closes, and uncapped legal cost pass-throughs. Uncapped is the default — in every batch of sheets I've seen, capped legal was the exception, and it was only ever there because someone asked. Ask. "Lender legal capped at $X absent bad faith" is a free win nobody volunteers.

The clause worth requesting by name: the expense tail dies if the lender walks. If they pull out for reasons other than material adverse diligence findings or you re-trading the deal, you shouldn't be paying their lawyers. Some lenders offer this unprompted; the rest will often accept it when asked. It's the single best filter for lender confidence — a fund that won't stand behind its own sheet with its own legal bill is telling you the sheet is an option, not an offer.

Do the dead-deal math before signing anything. Deposit + your legal spend to that point + 90 days of exclusivity = the cost of a deal that doesn't close. It's routinely six figures and a lost quarter. That number should make you pickier about which sheet you sign, and much more aggressive about nailing terms down before signature — both themes we'll build on.

Pass fast, for stated reasons

Half of process discipline is killing options quickly. Perfectly good reasons to pass, all of which I've seen used well:

• Too slow. A lender who takes three months to produce a sheet will take nine to close. Speed through diligence is data about the institution.
• Too expensive, per your written targets — not per your feelings.
• Too constrained. A structure whose caps, gates, and approval rights can't accommodate your realistic plan is a no today, however nice the pricing.
• Wrong thesis. A lender who needs convincing about your entire category will re-litigate the category at every amendment. You want lenders who arrive already believing the space and are underwriting you.

Tell them why, kindly and specifically. Credit is a small world, you'll see the same people at the next raise, and "they told us clearly and quickly" is how you want to be remembered. Cold comfort bonus: a lender who passed at seed becomes a warm first call at Series B.

The calendar

Realistic timeline for a first institutional facility, assuming things go well:

Call it six to nine months end-to-end; a quarter of that is post-signature. Fast deals exist — a simple bridge with a motivated lender can close in weeks — and slow deals are common: 12 months is not a horror story, it's a Tuesday. Plan your runway so the debt raise never becomes existential on a deadline. A lender who can see you need to close this month will price that urgency into the terms.

One caution flag while you wait: sheets come with expiration dates — "this proposal expires in ten days" — which are often more flexible than they look. Don't let an extendable deadline compress a real decision. But don't dawdle either; credit committees re-price, rate environments move, and a sheet that sits for six weeks may genuinely not be the same sheet.

You've run the process, the sheets are on the table, and each one is fifteen pages of defined terms. Time to read them properly — every line does something.