Term Sheet

A non-binding summary of the key economic and control terms of a priced investment round. Plain-language explainer with examples. Free to read.

Term Sheet

A non-binding summary of the key economic and control terms of a priced investment round.

What Term Sheet means

The term sheet is the document a lead investor issues that summarizes the deal: pre-money valuation, amount invested, board composition, liquidation preference, pro-rata rights, option pool, and other terms. It's usually 2–5 pages and non-binding, but signing it triggers exclusivity — typically 30–45 days to close.

The economic terms (valuation, option pool) get the most attention, but control terms (board seats, protective provisions) matter just as much for the founder's long-term operating freedom.

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•By Alejandro Cremades