Term Sheet Negotiation Startup

A term sheet is a non-binding offer from an investor to fund a startup. It outlines key terms: valuation, amount invested, investor rights, governance, and founder protections. Term sheet negotiation is the process of reaching agreement on these terms before lawyers draft binding legal documents. Understanding term sheet mechanics is critical for founders. Bad terms can devastate founder economics (excessive dilution, unfavorable liquidation preferences) or limit control (too many board seats for investors). This skill involves understanding deal structures, valuation frameworks, and negotiation strategy.