Term Sheet

A non-binding document that outlines the key terms and conditions of a proposed investment, including valuation, investment amount, investor rights, and governance provisions.

A term sheet is the beginning of the deal, not the end. Once you sign it, you are committed to negotiating in good faith with that investor. Understanding every clause before signing saves enormous pain in due diligence and the final documents.

An investor sends you a term sheet: £500,000 at a £3M pre-money valuation, with a 1x liquidation preference and a board seat. You counter at £4M pre-money with no board seat. Both parties sign an agreed term sheet before legal documents begin.