Term Sheet

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Term Sheet

Drafting Term Sheet

Introduction

A term sheet is a bullet-point document for startups which lays down the proposed terms and conditions for investment and is only for discussion purposes. A well-structured investment term sheet acts as a base for final Agreements such as Shareholder’s Agreements. A term sheet is considered to be an essential document by the entrepreneurs to attract investors.

Term Sheet assures that parties involved in the business transaction agree on the significant and fundamental aspects of the deal. On the other hand, it minimizes the chance of any misunderstanding and any unnecessary disputes between the parties in future.

Key Elements of Term Sheet

A term sheet mainly includes:

Details of the company, the current shareholders and the current directors
The valuation of the company
Reserved rights of the investors
Price per share
Voting rights
Details of what the invested funds will be used for
Any restrictions on the activities of the founders
A summary of the rights relating to the issue and transfer of shares
Liquidation preference
Anti-dilution provision
Exit Rights of the investors
Option pool
Information and Inspection rights
Arbitration clause
Governing Laws and Jurisdiction clause
Other essential terms and provisions

Drafting of a venture capital term sheet is simple with LegalWiz.in as it has experienced lawyers who ensure highest customer satisfaction and timely delivery of services. This entire process is managed online, with regular communication and assistance by the professionals available throughout. We have clients in all major cities of India including Mumbai, Delhi, Bangalore, Pune, Ahmedabad, Hyderabad and more as well as our services have equally relevant reach within smaller cities and towns in the country.

Advantages of Term Sheet

Non- binding

Mostly, term sheet agreement is non- binding in nature except for the confidentiality clause. Through the term sheet an investee can showcase their seriousness about the transaction without being legally bound or risking anything too soon. It also gives the investee more time to decide what covenants should be kept in the definitive agreements.

Reduces the chances of dispute

A term sheet includes the proposed terms and conditions and hence gives both the parties a fair idea of the future transaction. By having a term sheet before definitive documents both investor and investee can identify points of disagreement and negotiate upon those areas that plummets the chances of future disagreements and disputes.

Inherent Moral Obligation

Even if the term sheet does not contain any binding obligations, merely signing a term sheet can cause both investor and investee to be more committed towards the transaction as the document morally bounds them.

Provides clarity

A term sheet works as a proposal as it outlines the terms and conditions to be laid down in detail in the definitive agreements. It provides a clear picture of the transaction to the parties involved and reduces the scope of misunderstandings.

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Get a Term Sheet drafted in 3 Easy Steps

1. Follow Quick Process

Pick the best suitable Package.
Spare less than 10 minutes to fill out our online Questionnaire.
Make quick payment through our secured gateways.

2. Experts at LW are here to help

Assigned Relationship Manager
Consultation for apt clauses to safeguard sensitive information related to your business.

3. Start attracting the investors with a well drafted term sheet

All it takes is 3 working days*

Procedure to get the legal drafting done

DAY 1 - Collection

Discussion and collection of basic Information

DAY 2 - Execution

Drafting of Document by Professionals

DAY 3 – Submission

The first draft shall be sent to you for your review.

*If you feel you require any changes then you can contact the Professional at LW and he/she shall make the changes.
*2 amendments/iterations are included in the original drafting charges.

Explore FAQs for Term Sheet

Frequently Asked Questions

2020-05-26T09:02:36+00:00

Why are term sheets important?

A term sheet is an essential document by the entrepreneurs to attract investors as it works a base for the final agreement, reducing the possibility of misunderstandings and disagreements in the future.

2020-07-27T09:08:30+00:00

What can be included in a term sheet?

A term sheet includes the terms and conditions for financing a startup. It contains details regarding the company’s valuation, amount of investment, the percentage stake sought by the investors, the investor’s exit rights, anti-dilution provisions, and other important provisions related to the funding.

2020-05-26T09:03:46+00:00