Startup Investing
Term Sheet
Definition
What is Term Sheet?
A preliminary document outlining the main commercial terms of a proposed investmentAn asset or commitment of money made with the expectation of future income, growth, or both..
Example in practice
How This Looks in Practice
The term sheet states valuation, board rights, and liquidation preferenceA right determining how proceeds are distributed to preferred shareholders before ordinary shareholders in a sale or liquidation..
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Related Terms
Startup Investing
Pre-Money Valuation
A company's agreed value immediately before a new investment.
Startup InvestingPost-Money Valuation
A company's value immediately after adding new investment capital.
Startup InvestingValuation Cap
The maximum valuation used to convert a SAFE or convertible instrument into equity.
Startup MetricsBurn Rate
The rate at which a company spends cash, commonly measured monthly.