A Term Sheet is a record of Agreed on valuation and indicates the size of the investment that is to be made and the holding claims the Investor has in turn for the Investment he made.
Also, it may likewise be referred to as a letter of intent, a memorandum of understanding (MOU) i.e. memorandum of understanding. The first round of speculation from a financial investor is recognized as a Series a Term Sheet. Every round of investment has its terms & conditions and these conditions describe a business seeking outside capital funding. The label isn’t important, and about their structure and drafting they set out the key business and legal terms about a proposed transaction.
Term sheets can differ depending on what sort of funding round you are in, and how much is at stake, also who is involved.
Even though investment term sheets are not simply legal binding but evidence to them, they simply prove that once something has agreed in an investment term sheet, it might be difficult for either side to renegotiate. Despite whether renegotiation is possible, you might be forced to allow other matters of the deal which is necessary for you. A renegotiation may even influence the mutual understanding of the parties. Investment Term Sheet is important for both the financial investors &founders for multiple reasons, and you must take legal supervision before you sign them.