Bootstrapping vs Venture Capital: How to Decide
A side-by-side look at bootstrapping and venture capital, covering control, growth expectations, dilution and which business models actually fit VC, plus a simple decision framework.
Business & Retail Tech
What is Term Sheet?
Quick answer
A non-binding document that outlines the key terms and conditions of a proposed investment in a startup.
Term Sheet, explained
Before lawyers draft full investment agreements, an investor and a startup agree on a term sheet summarizing the deal. It typically covers the amount being invested, the company's valuation, the type of shares issued, liquidation preferences that decide who gets paid first in a sale, board seats, voting rights, anti-dilution protections, and employee option pools.
Most terms are not legally binding, though clauses such as confidentiality and exclusivity, which prevents the startup from negotiating with other investors for a period, often are. Founders should understand every clause, since some terms can matter more than headline valuation in determining how much founders and employees eventually receive. Experienced legal advice is strongly recommended before signing.
Related terms
Angel Investor
An individual who invests personal money in an early-stage startup, usually in exchange for equity or convertible notes.
UnicornA privately held startup valued at 1 billion US dollars or more.
Venture CapitalInvestment from specialized firms into high-growth startups in exchange for equity, with the aim of large returns when companies succeed.
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