Cap table & equity
Term sheet
Non-binding outline of investment terms before definitive documents are drafted.
Definition
A term sheet is a non-binding document outlining the key economic and control terms of a proposed financing round. It summarizes the proposed price, security type, board composition, investor rights, and protective provisions before the definitive legal agreements are drafted.
Same concept, different names
| Universal | Non-binding (except confidentiality/exclusivity clauses) |
|---|
What's in a term sheet
A standard priced-round term sheet covers three categories of terms:
- Economic terms: valuation (pre-money/post-money), amount raised, price per share, liquidation preference, dividends, anti-dilution
- Control terms: board composition, voting rights, protective provisions (consent rights on major decisions), drag-along, founder vesting
- Investor rights: pro-rata, information rights, ROFR, registration rights, exclusivity period
Binding vs non-binding sections
Most term sheet provisions are non-binding — they're intent, not contract. But two clauses are typically binding: exclusivity / no-shop (the company agrees not to negotiate with other investors for 30-60 days) and confidentiality. These create real legal obligations and should be reviewed carefully.
In Octelligence
From term sheet to closed round, in one workflow.
Octelligence models the term sheet's effect on the cap table before the documents are signed. Once closed, the round's actual terms are recorded on each new share issuance.
View cap tableCap table, registers, certificates
Track every investor right at the share level.
Pro-rata, ROFR, drag-along, MFN, registration rights. Recorded against the share, surfaced when relevant.