Establishing secure connection…Loading editor…Preparing document…

Investment Agreement Term Sheet

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

INVESTMENT AGREEMENT TERM SHEET

Parties and Effective Date

Effective Date:

Investment Terms

Investment Amount:    Security Type:

Price Per Share:    Shares Issued at Closing:

Capitalization and Ownership

Governance

Board Size:    Investor Board Seats:    Investor Observer Rights:

Economic Terms

Liquidation Preference:    Participating:    Cap on Participation:

Dividends (if any):

Anti-Dilution Protection:

Founder Vesting & Employee Matters

Employee Option Pool (post-closing):    Option Pool Increase at Closing:

Conditions to Closing

The obligations of the parties to close are subject to customary conditions, including:





Timetable & Closing

Target Closing Date:    Expected Deliverables at Closing: Signed definitive agreements, share certificates/escrow instructions, payment of investment funds, and agreed corporate actions.

Confidentiality, Exclusivity, Expenses, and Governing Law

Confidentiality: The parties shall maintain the confidentiality of this Term Sheet and all non-public information exchanged in connection with the proposed investment. Use of such information is restricted to evaluation and negotiation of the transaction.

Exclusivity: Company agrees not to solicit or negotiate with other parties with respect to the sale of securities for a period of days from the Effective Date.

Expenses: Each party will bear its own transaction expenses; however, Company agrees to reimburse reasonable out-of-pocket fees and expenses of the lead investor up to upon closing if so agreed in definitive documents.

Governing Law: This Term Sheet shall be governed by the laws of the State of , without regard to conflict of laws principles.

Binding Effect; Non-Binding Nature

This Term Sheet summarizes the principal terms of the proposed investment. Except for the provisions titled Confidentiality, Exclusivity, Expenses, and Governing Law (each of which is intended to be legally binding), this Term Sheet is non-binding and creates no legal obligation on any party to consummate the transaction. No binding commitment will exist until the execution of definitive agreements containing customary representations, warranties, covenants and indemnities.

Additional Terms / Notes

Company

Printed Name:

By:

Date:

Investor

Printed Name:

By:

Date:

Enter text✕
Prepare your document for signing right on this page
  • 01 Edit the text and complete the fields
  • 02 Click Sign Now and on the next screen add recipients and signature fields in SignNow
  • 03 Start your free trial to sign and send your doc
Sign Now

What an Investment Agreement Term Sheet Is

An Investment Agreement Term Sheet is a concise, typically non-binding summary of the principal economic and governance terms for a proposed investment. It records headline items—investment amount, valuation or price per share, security type, liquidation preference, board composition, and key closing conditions—so founders and investors share the same expectations before drafting definitive agreements. While most term sheet provisions are negotiation roadmaps, some clauses (confidentiality, exclusivity, expenses, binding break fees) may be expressly designated as binding. The term sheet accelerates diligence and frames later purchase and shareholder agreements.

Why Use a Term Sheet for Investment Negotiations

A clear term sheet shortens negotiations, aligns parties on material economics and control, reduces misunderstandings, and focuses legal drafting for definitive documents. It provides a single reference for diligence and internal approvals.

Why Use a Term Sheet for Investment Negotiations

Who Prepares and Reviews an Investment Term Sheet

Primary parties who draft, review, or rely on the term sheet during fundraising.

  • Founders and executive team — prepare commercial terms, confirm dilution impact, and coordinate internal approvals.
  • Investors (angels, VCs, private equity) — propose economic terms, investor protections, and closing conditions.
  • Corporate and securities counsel — review legal risk, compliance with securities law, and drafting of binding clauses.

Each stakeholder uses the term sheet differently: founders for clarity, investors for commitment signals, and counsel to move toward definitive agreements.

Essential Components to Include

A professional Investment Agreement Term Sheet documents the deal's economics, governance, and closing mechanics so the parties can negotiate efficiently and prepare final agreements.

Valuation

State pre-money or post-money valuation and how the valuation was calculated; define share classes used to derive price per share.

Investment Amount

Specify the aggregate investment, per-investor commitments, and whether funding is a single close or multiple closings with milestones.

Security Type

Identify instrument issued (preferred stock, common, convertible note, SAFE) and conversion mechanics or cap and discount, if applicable.

Liquidation Preference

Set liquidation multiple (e.g., 1x non-participating), participation rights, and seniority relative to other securities.

Board & Control

Define board seats, investor observer rights, protective provisions, and voting thresholds for key corporate actions.

Conditions to Close

List key closing conditions such as due diligence, legal opinions, corporate approvals, regulatory clearances, and execution of definitive documents.

Required Information and Quick Reference

Parties: Legal entity names
Effective Date: MM/DD/YYYY
Investment Amount: Currency and totals
Valuation: Pre/post-money
Securities Issued: Class and share count
Signatures: Authorized signer names

Step-by-Step: Completing a Term Sheet

Follow a clear sequence to draft, negotiate, and convert the term sheet into binding agreements while preserving key decision records.

  • 01
    Draft Terms: Record headline economics and governance in plain language.
  • 02
    Internal Review: Obtain management and board preliminary approval.
  • 03
    Negotiate: Exchange redlines with investors and resolve material differences.
  • 04
    Proceed to Close: Execute any binding clauses, finish diligence, and draft definitive agreements.

How to Configure an Online Term Sheet Workflow

Set up the document for secure e-signing, clear signer order, and automated storage to streamline closing.

Field Configuration
Template Use a standard term sheet template for consistency
Signing Order Investor then founder or simultaneous signing
Authentication Email link with optional SMS code
Storage Save PDF with audit trail

Where to Send and How Signatures Flow

A simple signing flow keeps parties coordinated and preserves a clear record of execution and timestamps.

  • Upload Document: Host the term sheet on a secure signing platform
  • Add Signers: Enter investor and company signer emails
  • Request Signatures: Send signing links or notarization requests if required
  • Confirm Completion: Distribute final signed copy and audit trail

Digital Signing and Submission Requirements

Ensure the e-signature platform supports required file formats, authentication strength, and audit trails before e-submitting the term sheet.

  • File Formats: PDF, DOCX supported
  • Integrations: CRM and cloud storage
  • Authentication: Email, SMS, or stronger options

Prefer platforms that offer tamper-evident PDFs, a complete certificate of completion, and secure storage to preserve enforceability and simplify subsequent legal review.

Common Timelines and Deadline Expectations

Set realistic timeboxes in the term sheet to keep the transaction on track and avoid open-ended obligations.

Negotiation Window:

Typically 7–30 days to finalize terms

Exclusivity Period:

Limited window preventing competing offers

Due Diligence Period:

Often 14–45 days depending on complexity

Target Close Date:

Specific date or condition-based milestone

Termination Date:

Date when the offer expires if not accepted

Common Mistakes to Avoid

  • Using vague terms for price or dilution that later cause disputes during definitive drafting and cap table calculations.
  • Omitting clear binding vs non-binding language, unintentionally creating legally enforceable obligations for either party.
  • Failing to specify investor protections (anti-dilution, pro rata, information rights), which increases renegotiation risk after closing.
  • Neglecting tax and securities implications—lack of accredited investor verification or incorrect characterizations can create regulatory exposure.

Penalties and Legal Risks of Errors

Unintended Binding Terms: May trigger specific performance claims
Confidentiality Breach: Liability for disclosing deal terms
Securities Violations: Regulatory fines or rescission risk
Tax Mischaracterization: Potential IRS adjustments and penalties
Invalid Signatures: Questions on enforceability
Missed Deadlines: Loss of exclusivity or deal collapse

Frequently Asked Questions About Term Sheets

Answers to common practical and legal questions encountered when preparing, signing, and relying on Investment Agreement Term Sheets.


Need help? Contact support

be ready to get more
Join over 28 million airSlate SignNow users
Sign Now
Company
Forms
Pricing
Resources
Knowledge base
Other Products
© 2026 airSlate Inc. All rights reserved.