# Term Sheet: [Company name], [Round or facility]

> Working term sheet for a venture or growth equity round, with an
> annex for a loan facility: economics, investor protections,
> governance, conditions and a negotiation log, plus worked numbers for
> price per share, option pool, liquidation preference and
> anti-dilution. Structure informed by publicly available model
> documents, cited by name only: the NVCA model legal documents (US)
> and the BVCA early-stage model documents (UK); for loans, the
> recommended forms of the Loan Market Association (LMA) and the LSTA.
> Replace every `[bracketed]` value and every row marked *Example*.
> This is a documentation format, not legal, tax, investment or
> financial advice; check the current official text and a qualified
> professional.

<!--
Guidance: How to use this template
- Purpose: keep one shared working version of the proposed terms,
  with each side's position and the agreed outcome, so the lawyers can
  draft long-form documents from a settled sheet.
- A term sheet is usually non-binding except for named clauses
  (confidentiality, exclusivity, costs, governing law). State which
  clauses bind in section 7.
- This is a working document, not the MBA learning card
  (`mba/mba-term-sheet-card`), which explains the concepts.
- The worked example uses the fictional Quorvia Labs, Inc. and the
  fictional lead investor Kestrelmoor Ventures Fund II. Figures in USD.
- Related templates: Cap table and venture finance card
  (`mba/mba-venture-finance-cap-table-card`), Data Room Index
  (`startup/data-room-index`), Fundraising Tracker
  (`startup/fundraising-tracker`), Due Diligence Request List
  (`finance/due-diligence-request-list`), Investment Committee Memo
  (`finance/investment-committee-memo`), Credit Memo
  (`finance/credit-memo`) and Covenant Compliance Certificate
  (`finance/covenant-compliance-certificate`).
-->

## Document control

<!-- Guidance: Record the parties, round and draft number. Each round of comments gets a new version so nobody negotiates against an old draft. -->

| Field | Value |
|---|---|
| Document ID | [TS-YYYY-NNN] *Example:* TS-2027-002 |
| Company | [Legal name, jurisdiction] *Example:* Quorvia Labs, Inc., Delaware |
| Instrument | [Series A preferred / growth equity / senior term loan] *Example:* Series A preferred stock |
| Lead investor or lender | [Name] *Example:* Kestrelmoor Ventures Fund II |
| Version | [Draft 1] |
| Status | [Draft / Under negotiation / Agreed / Signed] |
| Owner | [@company-cfo] |
| Approvers/reviewers | [@ceo], [@company-counsel], [@investor-counsel], [@board] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential] |
| Expiry of offer | YYYY-MM-DD |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Company CEO | [@name] | [Accept / Counter] | YYYY-MM-DD |
| Lead investor partner | [@name] | [Accept / Counter] | YYYY-MM-DD |
| Company board | [@name] | [Approve signing] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change summary |
|---|---|---|---|
| Draft 1 | YYYY-MM-DD | [@name] | Investor's first draft |
| Draft 2 | YYYY-MM-DD | [@name] | *Example:* Company comments on pool and board |
| Final | YYYY-MM-DD | [@name] | *Example:* Signed |

## 1. Offering terms and economics

<!-- Guidance: Settle price, amount and pool first, because every other term depends on them. Common pitfall: agreeing a pre-money valuation without agreeing whether the enlarged option pool sits inside it. -->

| Term | Proposed | Company position | Agreed |
|---|---|---|---|
| Amount raised *(Example)* | USD 8,000,000, lead USD 6,000,000 | Accept | Yes |
| Pre-money valuation *(Example)* | USD 24,000,000, fully diluted, including the pool top-up | Pool top-up outside pre-money | Open |
| Post-money valuation *(Example)* | USD 32,000,000 | | Follows |
| Price per share *(Example)* | USD 2.00 | | Follows |
| Option pool *(Example)* | 12% of post-money fully diluted | 10% | Open |
| Closing *(Example)* | Single closing; second closing within 90 days for up to USD 1,000,000 | Accept | Yes |

### 1.1 Worked numbers

*Example:* pre-money USD 24,000,000 / price USD 2.00 = 12,000,000
fully diluted pre-money shares. New shares: 8,000,000 / 2.00 =
4,000,000. Post-money fully diluted: 16,000,000 shares; investors hold
25.0%. A 12% post-money pool is 1,920,000 shares; with 800,000 shares
unallocated today, the top-up of 1,120,000 is inside the pre-money, so
the existing fully diluted shares (including the 800,000 unallocated
options) are 12,000,000 - 1,120,000 = 10,880,000 before the top-up.

## 2. Investor rights in the preferred shares

<!-- Guidance: Each right moves value between classes. Model the waterfall before agreeing. Common pitfall: accepting participating preferred without seeing the effect at modest exit values. -->

| Term | Proposed | Company position | Agreed |
|---|---|---|---|
| Liquidation preference *(Example)* | 1x, non-participating, senior to common | Accept | Yes |
| Dividends *(Example)* | Non-cumulative, 6%, when declared | Accept | Yes |
| Conversion *(Example)* | Optional at any time; automatic on qualified IPO or majority vote | Accept | Yes |
| Anti-dilution *(Example)* | Broad-based weighted average | Accept | Yes |
| Protective provisions *(Example)* | Series A majority consent for listed matters | Narrow the list | Open |
| Redemption *(Example)* | None | | Yes |

### 2.1 Liquidation waterfall

*Example:* Series A holds 4,000,000 of 16,000,000 shares (25%) and a 1x
preference of USD 8,000,000. It takes the higher of the preference and
its as-converted share.

| Exit value (USD) | Preference | As converted (25%) | Series A takes | Common and pool |
|---|---|---|---|---|
| 20,000,000 | 8,000,000 | 5,000,000 | 8,000,000 | 12,000,000 |
| 32,000,000 | 8,000,000 | 8,000,000 | 8,000,000 | 24,000,000 |
| 60,000,000 | 8,000,000 | 15,000,000 | 15,000,000 | 45,000,000 |

The indifference point is USD 32,000,000, the post-money valuation.

### 2.2 Broad-based weighted-average anti-dilution

*Example:* a later round issues 2,000,000 shares at USD 1.50 (USD
3,000,000). With A = 16,000,000 shares outstanding on a fully diluted
basis, B = 3,000,000 / 2.00 = 1,500,000 and C = 2,000,000, the new
conversion price is 2.00 x (16,000,000 + 1,500,000) / (16,000,000 +
2,000,000) = USD 1.9444. Series A then converts into 4,000,000 x 2.00 /
1.9444 = 4,114,286 common shares.

## 3. Governance and information

<!-- Guidance: Board composition shapes control more than any economic term. Common pitfall: an investor majority on the board after a single round. -->

| Term | Proposed | Company position | Agreed |
|---|---|---|---|
| Board *(Example)* | 5 seats: 2 common, 1 Series A, 1 CEO, 1 independent agreed by both | Accept | Yes |
| Information rights *(Example)* | Annual audited accounts within 120 days, quarterly management accounts within 45 days, annual budget | Accept | Yes |
| Pro rata right *(Example)* | Major investors (USD 1,000,000 or more) | Accept | Yes |
| Founder vesting *(Example)* | 4 years, 1-year cliff, credit for 18 months served | Credit 24 months | Open |

## 4. Transfer and exit terms

<!-- Guidance: These terms bind founders and later investors. Common pitfall: a drag-along with no minimum price or consideration form. -->

| Term | Proposed | Company position | Agreed |
|---|---|---|---|
| Right of first refusal and co-sale *(Example)* | On founder transfers | Accept | Yes |
| Drag-along *(Example)* | Board, Series A majority and common majority | Add minimum 1x return floor | Open |
| Registration rights *(Example)* | Customary demand and piggyback rights | Accept | Yes |

## 5. Conditions and timing

<!-- Guidance: List conditions precedent and the target date for each. -->

| Condition | Owner | Target |
|---|---|---|
| Satisfactory due diligence *(Example)* | Investor counsel | YYYY-MM-DD |
| Long-form documents agreed *(Example)* | Both counsel | YYYY-MM-DD |
| Board and stockholder approvals *(Example)* | Company counsel | YYYY-MM-DD |
| Regulatory clearances, if any (foreign investment screening) *(Example)* | Both | YYYY-MM-DD |

## 6. Annex: loan facility terms

<!-- Guidance: Use this annex instead of sections 1 to 4 for debt. Common pitfall: agreeing covenants before modelling headroom under the downside case. -->

| Term | Proposed | Borrower position | Agreed |
|---|---|---|---|
| Facility *(Example)* | USD 5,000,000 senior secured term loan | | |
| Tenor and repayment *(Example)* | 4 years, 12-month interest-only then straight-line | | |
| Interest *(Example)* | Reference rate plus margin [x]% | | |
| Fees *(Example)* | Arrangement fee [x]%, commitment fee on undrawn amount | | |
| Security *(Example)* | First-ranking over all assets | | |
| Financial covenants *(Example)* | Minimum liquidity USD 2,000,000; tested monthly | | |
| Events of default *(Example)* | Non-payment, covenant breach, insolvency, change of control | | |

## 7. Binding provisions, signatures and negotiation log

<!-- Guidance: Say which clauses bind. Log each change with its reason so the long-form drafting starts from facts. -->

Binding clauses: confidentiality, exclusivity of [N] days, costs (cap
USD [amount] payable by the company on closing) and governing law
[jurisdiction]. All other terms are non-binding until long-form
documents are signed.

| Log ID | Date | Term | Change | Reason |
|---|---|---|---|---|
| NEG-001 *(Example)* | YYYY-MM-DD | Option pool | 12% proposed, 10% countered | Hiring plan needs 1,600,000 shares |
| NEG-002 *(Example)* | YYYY-MM-DD | Drag-along | Floor added | Protect common in low exits |

## Standard and licence note

Structure informed by the publicly available NVCA model legal documents
(nvca.org, checked 2026-10-30), the BVCA early-stage model documents
and, for the loan annex, the LMA and LSTA recommended forms, all cited
by name only; no wording from those documents is reproduced. The NVCA
documents state that they are starting points and not legal advice.
Check the current model documents and local law. Quorvia Labs, Inc.,
Kestrelmoor Ventures Fund II and every figure are fictional. This
template is original text and is not legal, tax, investment or
financial advice; check the current official text and a qualified
professional. Template licence: MIT.