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The Term Sheet

In an angel round, it’s usually the company that is proposing terms for the deal.  In the case of a venture capital firm, if the initial Due Diligence has gone well, the VC will propose a term sheet. The term sheet lays out the investor’s terms for making an investment. Term sheets generally state that they are non- binding documents. In other words, nothing is official until you close the round by signing the formal, legal documents (see “Closing an Investment”).

Try to get More than One

In a VC round, you’d like to get term sheets from multiple VCs, if you can (although one is always better than none!) If you get more than one, you have much more leverage to negotiate terms

More Reading

These articles tagged “angel investors” are from our curated article/blog-post list. View the entire list of curated angel-investor articles at this link.

The VC Term Sheet Decoded, 2012 Oct 23
I’m not sure I agree that valuation is the most important term in a term sheet – but this article does provide a helpful, high-level overview

Demystifying the VC term sheet: Redemption rights, 2011 Jul 07

You Should Read Every Word of Every Legal Doc (Especially Funding Docs), 2011 Jun 17

Revisting the Term Sheet, 2011 May 23

Demystifying the VC term sheet: Pay-to-play provisions, 2011 May 10

Further Demystifying the VC Term Sheet, 2011 Apr 13

Want to Know How VC’s Calculate Valuation Differently from Founders?, 2010 Nov 07