term sheet

In business, a mutually agreed outline of a deal and its terms. It contains the details that form the basis of agreements later on. It is there to protect the investment fund and the parties to the agreement, both entrepreneur and investors, as well as to remove the potential for misunderstandings. Term sheets are common practice in industry and it is, therefore, essential for entrepreneurs to understand the key elements of the term sheet and to ensure that any term sheet signed accurately reflects their position.

The reliance placed on term sheets depends on the investor concerned. Some investors see it as an aggressive instrument; they would prefer to rely on building a relationship with their entrepreneur partner on a basis of trust.