Term Sheet

What is a Term Sheet?

A term sheet is a non-binding document that outlines the key terms and conditions under which an investment will be made. It serves as a starting point for negotiations between a startup and investors, typically including details such as valuation, investment amount, equity distribution, and investor rights. The final investment agreement is based on the terms set in the term sheet.

Key Elements of a Term Sheet

• Valuation: The pre-money or post-money valuation of the company.
• Equity Distribution: The percentage of ownership allocated to investors.
• Liquidation Preferences: Terms related to the priority of payouts in the event of a sale or liquidation.

Related Terms and Concepts

Equity, investment round, valuation, due diligence