Glossary · Fundraising
Term sheet
Definition
A term sheet lists the main terms of an investment: valuation, amount, type of shares, investor rights, board seats and conditions. In a funding round it is the investor's offer, and once it is signed, the lawyers draft the full documents and the investor finishes due diligence.
Where term sheet comes up
On this site, in our guides and in the conversations we've written up.
Video · New Ventures BC Startup fundraising: what investors check and what goes in the data room Ippel treats a term sheet as non-binding and answers a request for one by sending the actual financing documents, which makes the investor decide whether to lead, follow or walk. 
Video · 500 Global Early-stage due diligence: the legal documents investors should check Legal, tax and technical work, such as a code review, is usually outsourced once a term sheet or LOI is signed. 
Video · Khaitan & Co Cross-border diligence: why deals fall on clearances, not interest A second Khaitan partner says legal diligence should start before the term sheet, with public searches on litigation, regulatory actions, directors and foreign exchange violations. Related terms
Letter of intent A mostly non-binding document that sets out the main terms of a deal before the final contract is negotiated. Cap table The table showing who owns what in a company: shares, options and convertibles. SAFE note A simple agreement for future equity: early-stage funding that converts into shares at a later round. Convertible note A loan to a startup that converts into shares at a later funding round instead of being repaid.