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What is an east coast term sheet?

Last week, i was at an event chatting with a few VCs.

One of the VCs who is from silicon valley, asked if we use “east coast terms”.

Before I could reply, another Boston-based VC said that he uses an east coast term sheet for local investments and but uses his west coast term sheet for bay area investments.

There were too many things going on for me to interject but I’m not sure what they are talking about.

I invest in startups on the east coast and west coast. I don’t have do anything strange or unusual in our term sheets and closing documents. I use the same terms regardless of the location.  And none of the founders i work with on the west coast tell me that my terms were “east coast”.

The only difference I can think of between east and west coast term sheets is that some east coast VCs lock up startup employees with non-compete agreements and they can’t do that with California employees. 

I’m against employee non-compete agreements so I don’t ask for them in either case (unless I’m working with a co-investor that requires it and I fail to convince them otherwise). I don’t get the double standard and probably never will. 

Otherwise, I use highly competent law firms that understand what’s important in startups like Gunderson Dettmer and Fenwick & West. There are a few important terms (valuation, option pool, etc) and then everything else is just boilerplate at this point. 

But I don’t understand the idea of different terms for different coasts. Doesn’t seem fair or right to me.