Term Sheet
Definition
Term Sheet: A term sheet is a non-binding document outlining the key terms of a proposed investment, including valuation, investment amount, board composition, liquidation preferences, and protective provisions. It serves as the basis for negotiating and drafting final legal documents.
Example Usage
“We received two term sheets and negotiated for better board terms before signing with our preferred investor.”
Common Misconceptions
Related Terms
Valuation
Valuation is the estimated worth of a company at a given point in time. Pre-money valuation is the company's value before receiving new investment, wh...
Liquidation Preference
Liquidation preference determines how proceeds are distributed when a company is sold or liquidated. Investors with liquidation preference get paid be...
Dilution
Dilution occurs when a company issues new shares, reducing existing shareholders' ownership percentage. In each funding round, founders and early inve...
Cap Table
A capitalization table (cap table) is a spreadsheet or database showing the equity ownership of a company, including shares held by founders, employee...
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