A term sheet is a non-binding document that outlines the key terms and conditions of a proposed investment. It covers valuation (pre-money and post-money), investment amount, share class, liquidation preference, anti-dilution protection, board composition, voting rights, pro rata rights, and option pool requirements. Signing a term sheet typically triggers an exclusivity period during which the company cannot negotiate with other investors while due diligence is conducted.
Valuation (pre/post), investment amount, liquidation preference, board composition, pro rata rights, anti-dilution, and option pool.
Typically issued after initial meetings and before due diligence. Signing triggers exclusivity period.
Focusing only on valuation; not understanding liquidation preferences; missing protective provisions; not negotiating option pool size.
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