Get Term Sheet Example

A venture capital (VC) term sheet is a statement of the proposed terms and conditions for a proposed investment. Most of the terms are non-binding, except for certain confidentiality and exclusivity rights. Founders who receive a term sheet need to understand, from a legal perspective, how to manage the process.

It shouldn't take more than a week, or even just a few days, to negotiate a term sheet, once a VC decides they want to do a deal. There really aren't many variables these days, really just price and how much you are raising/selling. Most of the rest of the terms are much lower drama than they used to be.

A term sheet is a document which sets out certain terms of a transaction agreed in principle between parties, and is typically negotiated and signed at the beginning of a transaction. Term sheets evidence serious intent, but generally are not legally binding.

The term sheet is akin to a letter of intent. Once signed, it opens up a process of negotiation between your founding team and a VC that will result in a legal document detailing their investment.

Term sheets are not binding. If an investor presents you with a term sheet, it does not mean that you are going to close on the financing. The investor is still completing its due diligence. If the investor discovers something that he or she does not like, then the investor may step away from the transaction.

This term sheet is not a contract or a binding agreement but just an expression of a possible business transaction between the Target and the Buyer. No party will be bound for a transaction until and unless definitive agreements are executed by the parties to this transaction.

Term sheet negotiation: The top 5 best practices to know Best practice #1 – Get more than one VC interested. ... Best practice #2 – Understand common market terms. ... Best practice #3 – Watch out for red flags. ... Best practice #4 – Understanding valuation and dilution is critical. ... Best practice #5 – Consult with experts for advice.