Term sheet
The summary of a round's economics and control terms, mostly non-binding, signed before lawyers draft the definitive documents.
The term sheet is the document that turns interest into a deal: a few pages from the lead investor summarizing the terms on which they propose to invest. It is signed before due diligence completes and before definitive documents are drafted, and it is mostly non-binding, a statement of intent rather than a contract, with two customary exceptions that do bind: exclusivity (the no-shop, typically 30 to 60 days) and sometimes expense provisions.
Its content splits into two families. Economics: valuation, round size, option pool, liquidation preference, anti-dilution. Control: board composition, protective provisions (the list of decisions requiring investor consent), information rights, founder vesting. Founders negotiate economics by instinct; experienced counsel earns its fee on control, where a clause costs nothing today and everything at the wrong board meeting.
Mostly non-binding does not mean low stakes. Signing locks the company into exclusivity while diligence runs, so the negotiation leverage peaks the day before signature and, for most companies, decays after. Re-trading, a lead worsening terms after diligence, happens; the defenses are a clean data room, references on the fund’s behavior in past deals, and not burning the runway to the point where walking away is impossible.
A quantum term sheet prices a technical roadmap, and the dangerous clauses are rarely the headline valuation: milestone-tranched funding, aggressive anti-dilution, or an oversized pool cost more across a long roadmap than a point of pre-money. The pool of credible quantum leads is also narrow, so competing term sheets are rarer than in SaaS; with less auction leverage, spend the negotiation on the three terms that compound (preference, anti-dilution, pool), not on the number in the press release.
From definition to decision
Model this in your own round, scenarios, dilution and runway, in the founder workspace.