Term sheet

A short, mostly non-binding document setting out the main terms of an investment before the full legal documents are drafted.

Example

Two to four pages covering amount, valuation, board composition, liquidation preference and investor rights.

Non-binding legally, extremely binding socially. Walking away from a signed term sheet is rare and damaging — negotiate before you sign, not after.

Liquidation preference — The right of preferred shareholders to get their money back first when the company is sold, before common shareholders get anything.
Pro-rata rights — An investor's right to invest again in future rounds to maintain their existing ownership percentage.
Board seat — A place on the company's board of directors, which oversees the company and can hire or fire the CEO.
Priced round — A funding round where the share price is actually agreed, shares are issued immediately and a valuation is set.

When to talk to a lawyer or accountant — Which situations genuinely need a professional, which do not, and how to spend the least money getting the most protection. (10 min)
Liquidation preference — The term that decides who gets paid when the company sells — and it matters more than your valuation. (12 min)
The fundraising process end to end — Prepare, list, introductions, first meetings, partner meeting, diligence, term sheet, legals, close. Three to six months, run as a process. (15 min)
Due diligence — What investors check before wiring, and the four things that most often kill a deal at this stage. (12 min)
Reading a term sheet — Two to four pages that decide the next several years. What each clause means and which ones actually matter. (15 min)