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What does a Term Sheet look like?
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What does a Term Sheet look like?

And spotting “dirty” terms that could hurt your company

CJ Gustafson's avatar
CJ Gustafson
Jun 22, 2023
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To those only vaguely familiar with the opaque world of fundraising, a “Term Sheet” is a sort of mythical creature that exists in startup land. They come around once in a while, usually linked to fantastic stories of overnight riches, or baked into the plot of a TV series. But for outsiders, it’s hard to describe what they actually look like, or even confirm if they are a real thing. Kind of like a Narwhal.

1/3 of people stopped reading by now. Also, ya boy copped a Canva sub. Get at me.

So what does a VC Term Sheet actually look like? How are they structured? What are the key “Terms?” And what’s a “dirty” term sheet?

What’s a Term Sheet

A term sheet is a nonbinding document outlining the price and conditions of a private investment. It serves as a template and the basis for more detailed, legally binding documents. It’s basically a non formal version of a formal process that might go down. It shows commitment without really committing.

Confused charles

And, if startups are really special, they may receive multiple term sheets at the same time from various investors and get to choose one. This often happens in high demand rounds, like what we saw from 2021 through 2022.

Oprah Winfrey Car GIF
“You get a term sheet, you get a term sheet, you…”

What does a term sheet look like?

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