Getting a term sheet from an investor is like getting an invitation to the Prom in January–you’ve got a long way to go before you dance.

When you get a term sheet from a VC or angel investor, you need to decide whether the economics of the deal feel right. And you also have to understand that there’s more to a term sheet than economic terms like pre-money valuation. There’s control, liquidity, and management terms to carefully consider.

Do some background research on your prospective investor. Have they published a list of their portfolio companies?

Finally, resist the temptation to use one submitted term sheet to obtain another term sheet with a better pre-money valuation. Even though you may not be prohibited from shopping the deal, remember that the investor community tends to be close-knit.

You can shop deals simultaneously, but don’t try to leverage one venture firm against another. Remember that some deals are financed by more than one firm. And even if your deal is a one-firm deal, the serial entrepreneur in you will likely have you back in front of venture firms in the years ahead.

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