Document background
The Funding Term Sheet is a foundational document in the US investment landscape, typically used during the preliminary stages of a financing round when a company is seeking capital investment. This document outlines the principal terms and conditions under which an investor (or group of investors) proposes to invest in a company, covering crucial elements such as valuation, investment amount, security type, and key investor rights. While predominantly non-binding, except for specific provisions like confidentiality and exclusivity, the Term Sheet serves as the blueprint for the subsequent definitive agreements. It must comply with US federal securities laws and state-specific regulations, particularly when dealing with private placements under Regulation D exemptions. The document is essential for establishing clear expectations and alignment between parties before incurring the cost and time of full legal documentation.
