Term Sheets

Definition

Non-binding agreements where VCs outline investment terms before lawyers make them binding, during which everyone pretends the math makes sense.

Example Usage

We received a term sheet from Sequoia with a post-money valuation of $30M and 1x liquidation preference, which our founder celebrated until learning what liquidation preference actually means.

Origin

Standard venture capital documentation practice

Fun Fact

Term sheet negotiation can take 4-8 weeks and cost $50K-$150K in legal fees just to finalize documents that say the same thing either way

Source: Venture capital documentation

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