Term sheet generator
A term sheet is the one-page summary that anchors a financing before the long-form documents. Enter the round size, the pre-money valuation, the security type, the option pool and the standard terms, and download a clean term sheet you can send or react to. It covers the economics and the main control and protective terms that a typical priced or SAFE round includes. As with any deal document, have counsel review the final version.
TERM SHEET, [Company] (Non-binding except where stated) This term sheet summarizes the principal terms of a proposed financing of [Company]. It is non-binding except for the Confidentiality and Exclusivity provisions, and is subject to definitive documentation. FINANCING Security: Series Seed Preferred Stock Amount raised: $2,000,000 Pre-money valuation: $8,000,000 Post-money: $10,000,000 Investor ownership: ~20.0% (before option-pool adjustment) Option pool: 10% of the post-financing fully diluted capitalization, created or topped up pre-money PREFERRED TERMS Liquidation pref: 1x non-participating Dividends: Non-cumulative, paid if declared Conversion: Convertible to common at any time; automatic on a qualified IPO Anti-dilution: Broad-based weighted average Voting: Votes on an as-converted basis; customary protective provisions GOVERNANCE Board: 2 founders, 1 investor, 0 independent Information rights: Standard major-investor information and pro-rata rights Protective rights: Customary consent rights over major actions OTHER (BINDING) Confidentiality: The terms of this term sheet are confidential. Exclusivity: The Company will negotiate exclusively with the investor for 30 days. Expenses: Each party bears its own legal costs (or as negotiated). This document is a general template and not legal advice, tax advice, or an offer. Have counsel review before relying on it.
How it works
- 1Enter the company, the round size and the pre-money valuation.
- 2Pick the security type and set the option pool and key terms.
- 3Download a term sheet with the economics and control terms laid out.
Frequently asked questions
Is a term sheet binding?+
The commercial terms in a term sheet are generally non-binding, an agreement to proceed on those terms subject to documentation and diligence. Clauses like exclusivity and confidentiality are often binding. The definitive agreements that follow are what bind the deal.
What are the key terms in a term sheet?+
The main ones are valuation (pre-money and post-money), the amount raised, the security type, the option pool, liquidation preference, board composition, pro-rata rights and protective provisions. The economics and the control terms are the two halves to watch.
What is a typical liquidation preference?+
A 1x non-participating liquidation preference is the most founder-friendly and most common standard for early-stage rounds. Participating preferences or multiples above 1x are more investor-favorable and worth negotiating carefully.
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