What is a term sheet?
A term sheet is a short document setting out the main commercial terms of a proposed investment or deal - valuation, amount, rights and key conditions - before the full legal contracts are drafted.
A term sheet is the outline of a deal. In a fundraise it captures the numbers and rights the parties have agreed in principle: how much is being invested, at what valuation, what class of shares, and the key protections such as liquidation preferences, board seats, anti-dilution and information rights. It lets both sides confirm they are aligned on the substance before lawyers spend time on the long-form documents.
Most of a term sheet is non-binding: it signals intent rather than creating an enforceable obligation to complete. A few clauses usually are binding - typically confidentiality and exclusivity (a 'no-shop' period) - so the wording matters even at this early stage.
Signing a term sheet normally moves a deal into confirmatory due diligence and drafting. It is the point where a handshake becomes a documented plan, so the confidential material behind it tends to open up around the same time.
In 99 Data Rooms
How it works here.
In 99 Data Rooms you can circulate a draft term sheet as a tracked, revocable link and see who has read it before a call, then open the supporting due diligence room once terms are agreed. Sensitive drafts stay gated by verified email or passcode, UK-hosted and encrypted at rest, so an early-stage document does not drift beyond the people in the conversation.
Common questions
Term sheet, in short.
Is a term sheet legally binding?
Mostly no - the commercial terms are usually expressed as non-binding intent. Certain clauses, such as confidentiality and exclusivity, are typically binding. Always take legal advice on which parts of a specific term sheet bind you; this is general information, not legal advice.
What is the difference between a term sheet and heads of terms?
They are close cousins. 'Term sheet' is common in venture and investment deals; 'heads of terms' (or a letter of intent) is common in M&A and commercial agreements. Both summarise the key terms before full contracts are drafted.
Related terms
What is a heads of terms agreement?
Heads of terms is a document setting out the main points of a proposed deal that the parties have agreed in principle, before full contracts are drafted - largely non-binding, but with some clauses that bind.
DefinitionWhat is due diligence?
Due diligence is the structured investigation a buyer, investor or lender runs before a deal, checking a company's finances, contracts, legal standing and risks against what has been claimed.
DefinitionWhat is a cap table?
A cap table (capitalisation table) is a record of who owns what in a company: every shareholder, their shares or options, and the percentage of the business each holds.
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