Term Sheet
Definition
A non-binding document outlining the key commercial terms of a proposed investment, including the investment amount, pre-money valuation, security type, liquidation preference, anti-dilution provisions, board rights, information rights, and any other material conditions. A term sheet is the precursor to the binding investment agreement. Every term in the term sheet with financial implications must be modeled in the cap table before the term sheet is signed.
Common Misapplication
The most common misapplication is signing a term sheet before modeling the financial implications of all its terms. A term sheet that includes a two times participating preference, a pre-money option pool expansion, and a broad-based anti-dilution provision has a combined financial effect on founder economics that must be understood before signature.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.5: The Liquidation and Exit Mechanics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Term Sheet. https://ffistandard.org/glossary/term-sheet/. 2026.