Term Sheet Generator

What Is a Term Sheet?

A term sheet is a non-binding document that outlines the principal terms of a proposed investment. It serves as the foundation for negotiations between a company and its investors before the parties proceed to draft definitive legal agreements (the stock purchase agreement, investor rights agreement, voting agreement, and right of first refusal and co-sale agreement).

Term sheets typically cover economics (valuation, share class, liquidation preference), governance (board composition, protective provisions), and investor rights (pro-rata, anti-dilution, information rights). The specific provisions and their investor-friendliness vary by round stage, market conditions, and the relative leverage of each side.

Binding vs Non-Binding

The vast majority of a term sheet is non-binding. Valuation, liquidation preferences, board seats, and protective provisions are all subject to change during legal documentation. However, two provisions are almost always binding: the no-shop / exclusivity clause (which prevents the company from soliciting other offers during the specified period) and the confidentiality clause (which prevents either party from disclosing the terms). Governing law is also typically binding.

If you are structuring a deal using convertible instruments instead of priced equity, see the Convertible Note & SAFE Calculator for modeling conversion mechanics.

This generator produces a template for discussion purposes only and does not constitute legal advice. All term sheets should be reviewed by qualified legal counsel before use in any transaction. Terms and standard provisions vary by jurisdiction.