Description
A Venture Capital (VC) Term Sheet is a non-binding document that outlines the basic terms and conditions under which a venture capital firm is willing to invest in a startup. It serves as a roadmap for negotiating a final, legally binding investment agreement. While not enforceable on its own, it sets expectations and aligns both parties on key deal components.
Major elements of a VC Term Sheet include valuation, amount to be invested, type of shares (typically preferred), equity ownership percentage, board structure, voting rights, liquidation preferences, anti-dilution provisions, investor rights (information, pro-rata), founder vesting schedules, and exit clauses. It may also include conditions precedent (due diligence requirements) and exclusivity and confidentiality provisions.
VC term sheets are often customized to the stage and risk profile of the startup. For early-stage rounds, the document may focus more on founder commitments and protective provisions. For later stages, the emphasis may shift toward financial metrics, growth KPIs, and path to exit.
Although non-binding, the term sheet signals serious investor interest and helps prevent misunderstandings by clearly laying out the investment deal structure in advance. Once accepted, it leads to formal documentation such as the Share Purchase Agreement, Investor Rights Agreement, and Shareholders’ Agreement.
A Venture Capital Term Sheet is a pivotal document in the startup funding lifecycle—shaping ownership, control, and long-term alignment between founders and institutional investors.
Odinaka –
We provide this term sheet to our cohorts to prepare them for real VC conversations. It breaks down complex clauses into understandable sections—perfect for first-time founders.
Safiyanu –
I’ve seen a lot of poorly structured deals—this term sheet provides the clarity both founders and investors need. It sets the tone for a smooth negotiation.
Alasan –
Having this term sheet ready gave us a huge edge in our Series A prep. It helped us walk into investor meetings with confidence and negotiate better terms.
Fidelis –
This is a comprehensive and practical template. It includes everything from liquidation preferences to anti-dilution rights, with a structure that’s easy to adapt.
Faiza –
This term sheet template was incredibly helpful during our seed round. It covered all key investor terms clearly, and our lawyer even said it was one of the cleanest drafts he’d seen.