A term sheet is a non-binding document laying out the proposed terms of an investment: valuation, how much is being raised, board seats, and investor rights. The binding agreements come later, once the lawyers draft them.
Signing a term sheet doesn't close a round. It's a statement of intent both sides use to agree on the shape of the deal before spending real legal fees on the definitive documents (the stock purchase agreement, the investor rights agreement, and so on). Most of it is non-binding. A couple of sections, usually confidentiality and exclusivity (the "no-shop" clause), are the exception, and they hold even if the deal falls apart later.
The terms that matter most to a founder aren't always the valuation line. Liquidation preferences, board composition, and pro-rata rights shape what happens at the next round or an exit far more than the headline number does. A term sheet is also usually what triggers the data-room request that follows within days, so diligence starts in earnest right about here.
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