A term sheet is a non-binding document that outlines the key terms and conditions of a potential investment in your startup, serving as a blueprint for future agreements. Understanding its components—such as valuation, equity allocation, and investor rights—can empower founders to negotiate favorable terms and protect their interests.

In startup fundraising, a term sheet is a mostly non-binding document outlining the terms and conditions under which venture capitalist investors will invest in a startup. The economic terms outlined in terms sheets include company valuation, investment amount, percentage stake, and liquidation preference.

A term sheet is a preliminary, non-binding document outlining the proposed investment amount and other important details of a deal. When you’re raising funds for your startup, a lead investor will use a term sheet to outline the key points of their offer to invest in your company.

A term sheet is a nonbinding agreement outlining the basic terms and conditions under which an investment will be made. Term sheets are most often used for startups. Entrepreneurs find this document crucial to attracting investors, such as venture capitalists (VC) with capital to fund enterprises.

Term sheets are critical in startup financing, outlining fundamental terms such as valuation, investment amount, and security type. These preliminary agreements set the stage for binding contracts and influence ownership distribution, investor rights, and governance structures.