Term sheet

A term sheet is two to six pages that fix the economics and control of a round: pre-money valuation, amount, instrument (usually compulsorily convertible preference shares in India), ESOP pool to be created before the round, liquidation preference, anti-dilution, board seats, information rights, founder vesting and exclusivity. Only the exclusivity, confidentiality and cost clauses bind; the rest becomes binding in the shareholders agreement and share subscription agreement. You meet it at the end of a fundraising process, after the pitch and the investor's partner meeting, and it typically takes two to four weeks of negotiation before diligence starts. What it means for you: everything in the term sheet is negotiable, and everything left vague will be resolved in the investor's favour later, so agree the pool, preference and consent matters here, not in the long-form documents.