When USV commits to investing in a startup, we negotiate a term sheet and then hand over the details to our lawyers. The startup hires a lawyer, and we hire a lawyer. The startup's lawyer prepares the closing documents, and our lawyer reviews them. In addition, our lawyer conducts "legal due diligence," which primarily involves reviewing existing contracts, stock issuances, the charter, and other relevant legal documents.

This process is expensive and made worse because the startup typically pays for both lawyers.

This is how it has always been done since I started in the business in the mid-80s, and I have always been uncomfortable with how expensive it is.

So I decided to run an experiment over the holidays.

We committed to lead a round of financing for a company in mid-December. We negotiated a term sheet and signed it before everyone departed for the holidays. I reached out to a law firm that I have used many times for this sort of thing and asked for a quote to handle our side of the deal. The quote came back at $50k.

So I said, "screw it" and decided it was time to try something different.

I fired up Google's NotebookLM, which allows users to create "notebooks," which are a large collection of documents that can then be used to run AI queries.

I put a large collection of "closing binders" of investments USV has made over the years, particularly companies I worked on, into one Notebook. I added the signed term sheet to this Notebook.

To create a second Notebook, I pointed NotebookLM at the data room that the startup we are investing in provided for legal diligence. That data room had every legal document the startup had entered into, including those with its employees, since it got started.

When we received the draft closing documents from the startup's lawyer, I added them to the first Notebook and asked for a legal review of the draft documents against the body of legal documents we have signed over the years, and most importantly, against the term sheet we had signed. I asked for a memo that outlined all of the issues with the draft documents and highlighted the most significant ones.

I then turned to the second Notebook and asked a series of questions like "tell me about the structure of the company and its subsidiaries and who is on the board of each of them" and "give me a list of every employee, the stock they have been issued, and all of the agreements they have signed" and "are their arbitration clauses in every agreement the company has signed?" I spent about half an hour asking these sorts of questions and put the answers to each into a Google Doc.

There is one issue that came out of all of this legal work that I need to understand better and possibly change in the documents. I scheduled a call with the company and its lawyer to go over that. Otherwise, I came away from this process confident that the company's legal affairs are in good shape and the closing docs reflect the term sheet we agreed to and mirror the customary provisions and protections USV receives in investments we make.

While this did take about two hours of my time, we did not incur any legal fees. NotebookLM is either free to use, or comes with USV's Google Workspace subscription. I honestly don't know the answer to that.

There is one more thing we can do in the VC industry to make this process even better. We can all agree to use standard docs like the NVCA documents that are publicly available to use.

With standard documents and Notebook Lawyer, prediction number four in my 2026 predictions can easily come true.

4/ A majority of venture capital deals close without lawyers on either side due to standardized documents (like the NVCA ones) and AI tools for review and legal diligence.

All we need is startup founders to demand this. And VCs to have the willingness to say yes.

This VC has already done that.

When USV commits to investing in a startup, we negotiate a term sheet and then hand over the details to our lawyers. The startup hires a lawyer, and we hire a lawyer. The startup's lawyer prepares the closing documents, and our lawyer reviews them. In addition, our lawyer conducts "legal due diligence," which primarily involves reviewing existing contracts, stock issuances, the charter, and other relevant legal documents.

This process is expensive and made worse because the startup typically pays for both lawyers.

This is how it has always been done since I started in the business in the mid-80s, and I have always been uncomfortable with how expensive it is.

So I decided to run an experiment over the holidays.

We committed to lead a round of financing for a company in mid-December. We negotiated a term sheet and signed it before everyone departed for the holidays. I reached out to a law firm that I have used many times for this sort of thing and asked for a quote to handle our side of the deal. The quote came back at $50k.

So I said, "screw it" and decided it was time to try something different.

I fired up Google's NotebookLM, which allows users to create "notebooks," which are a large collection of documents that can then be used to run AI queries.

I put a large collection of "closing binders" of investments USV has made over the years, particularly companies I worked on, into one Notebook. I added the signed term sheet to this Notebook.

To create a second Notebook, I pointed NotebookLM at the data room that the startup we are investing in provided for legal diligence. That data room had every legal document the startup had entered into, including those with its employees, since it got started.

When we received the draft closing documents from the startup's lawyer, I added them to the first Notebook and asked for a legal review of the draft documents against the body of legal documents we have signed over the years, and most importantly, against the term sheet we had signed. I asked for a memo that outlined all of the issues with the draft documents and highlighted the most significant ones.

I then turned to the second Notebook and asked a series of questions like "tell me about the structure of the company and its subsidiaries and who is on the board of each of them" and "give me a list of every employee, the stock they have been issued, and all of the agreements they have signed" and "are their arbitration clauses in every agreement the company has signed?" I spent about half an hour asking these sorts of questions and put the answers to each into a Google Doc.

There is one issue that came out of all of this legal work that I need to understand better and possibly change in the documents. I scheduled a call with the company and its lawyer to go over that. Otherwise, I came away from this process confident that the company's legal affairs are in good shape and the closing docs reflect the term sheet we agreed to and mirror the customary provisions and protections USV receives in investments we make.

While this did take about two hours of my time, we did not incur any legal fees. NotebookLM is either free to use, or comes with USV's Google Workspace subscription. I honestly don't know the answer to that.

There is one more thing we can do in the VC industry to make this process even better. We can all agree to use standard docs like the NVCA documents that are publicly available to use.

With standard documents and Notebook Lawyer, prediction number four in my 2026 predictions can easily come true.

4/ A majority of venture capital deals close without lawyers on either side due to standardized documents (like the NVCA ones) and AI tools for review and legal diligence.

All we need is startup founders to demand this. And VCs to have the willingness to say yes.

This VC has already done that.