A term sheet is a non-binding document, and it can set out conditions of a business transaction that parties involved can negotiate and agree on before incurring expensive legal fees involved in creating legal documents. This is a common document developed between investors and businesses when making a financial investment.
For example…
Let’s say InvestNow has agreed to financially invest in a textile engineering start-up hoping to revolutionise the clothing industry. To proceed, InvestNow draw up a term sheet containing details such as a description of the investment, percentage invested, the stake sought as well as valuation. The parties can then negotiate and agree before proceeding to legally formalise the investment.
