Term Sheet

A term sheet is a non-binding document that outlines the key terms of a proposed venture investment, including valuation, the amount being raised, board composition, liquidation preferences, and investor protective provisions, before the parties draft the full legal financing documents. Signing a term sheet typically triggers an exclusivity period during which the founder agrees not to shop the deal to other investors while due diligence and final documentation proceed.

What are the most negotiated terms on a term sheet?

Valuation and round size get the most attention publicly, but liquidation preference, anti-dilution protection, board seats, and pro rata rights often matter more to long-term outcomes for founders and early employees. A term sheet that looks generous on headline valuation can still be founder-unfriendly if it stacks a 2x liquidation preference or full-ratchet anti-dilution protection into the fine print.