Raising money
Term sheet
A term sheet is a short document listing the main terms of a proposed investment: how much money, at what valuation, and what rights each side gets.
Also called termsheet
Most of it is not legally binding until the final documents are signed, though clauses like confidentiality usually are. Every line still has real effects later, from who controls the board to who gets paid first in a sale.
This is not legal or tax advice, check with a lawyer or accountant.
When this shows up
Example, not a real founder: you receive your first term sheet and focus on the valuation line. A clause near the end gives the investor a veto over future fundraising. You only notice it when you try to raise again.
What to do next
Read every clause and write one plain sentence beside each, saying what it lets the investor do. Mark any line you cannot explain and ask your lawyer about those first.
Go deeper
Participating preferred with a 1x cap, and what it costs you
Each clause it finds explained in plain words, with the ones that may be worth raising with a lawyer pointed out.
Read the guide