Term sheet
A mostly non-binding document setting out the proposed valuation, structure and key economic and control terms of an investment.
Why it matters
Signing usually starts exclusivity and legal work. The terms you accept here are difficult and expensive to reopen later, so this is the moment to negotiate.
A worked example
A term sheet specifies a $12M pre-money, a $3M round, 1x non-participating preferred, a 10% option pool and one board seat.
What is typical
Binding provisions are usually limited to exclusivity, confidentiality and expenses. Everything economic is non-binding but very hard to change once agreed.
Model the terms before you sign →
Related terms
Liquidation preference
The amount investors are paid out of exit proceeds before common shareholders receive anything.
Read more →Lead investor
The investor who sets the terms, does the deepest diligence and usually takes the largest allocation.
Read more →Due diligence
The investor's formal verification of your business, financials, legal position, technology and team.
Read more →Run your raise on this
VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
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