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Entrepreneurship guide: Raising venture capital with a term sheet


If you’ve made it through the pitch process and are at the point where an investor has handed you a copy of a term sheet, you have a right to feel pretty excited.

So give yourself a few minutes to celebrate — and then get down to business.

While a term sheet isn’t a legally binding document, it has the potential to shape every future round of funding you raise. It’s extremely important to read it carefully, hire a lawyer to help you understand what you just read, and make sure you’re comfortable with everything in there before signing your name.

Business Insider spoke with founders, investors, and lawyers about key aspects of the term sheet and the most common pitfalls to avoid.



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