Term Sheet
Definition
A term sheet is the mostly non-binding summary of a proposed investment: valuation, round size, liquidation preference, board composition, and key rights, negotiated before final documents.
How it comes up in fundraising
A signed term sheet with a no-shop effectively ends the competitive process, so founders collect competing term sheets before signing, not after.
Frequently asked questions
Which term sheet clauses are binding?
Typically exclusivity (no-shop) and confidentiality; the economic terms bind only in definitive documents at closing.
What matters most in a term sheet besides valuation?
Liquidation preference structure, board composition, option pool sizing, and protective provisions; a worse valuation with clean terms often beats the reverse.
Round Funded resources
Related terms
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