Term Sheet

The Term Sheet is the document where most Indian fundraises are won or lost — long before the SHA, the Subscription Agreement and the Disclosure Schedule are drafted. It is the architectural blueprint of the round. Every concession agreed at term-sheet stage gets baked into 60-page definitive documents weeks later, and reversing a concession at SHA stage is almost impossible without renegotiating valuation. Founders who do not get the term sheet right pay for it for years.

By 2026, term sheets in Indian venture rounds have settled into a familiar architecture: most economic terms are non-binding (price, valuation, board, anti-dilution, liquidation preference, ESOP pool), but a handful of clauses are aggressively binding from the day of signature — exclusivity / no-shop, confidentiality, expense reimbursement, governing law and dispute resolution. The split matters because it determines what you can walk away from, what you cannot, and what the cost of the walk is. A founder who signs a term sheet with a 90-day exclusivity, a broad no-shop and an expense reimbursement clause has already given up months of optionality before any cheque arrives.

We draft and review term sheets for both founders and investors — early-stage, growth, secondary and bridge — across Series A, B, C and beyond. Same team translates the term sheet into the SHA / SSA, runs the DD, manages closing and files the post-closing compliance. The result is a term sheet that holds up under negotiation pressure and survives translation into definitive documents without slippage.

What a Properly Drafted Term Sheet Locks Down

• Binding vs Non-Binding Architecture:: Most economic terms (price, board, anti-dilution, preference) are non-binding placeholders for the SHA. Exclusivity, no-shop, confidentiality, expense reimbursement, governing law and dispute resolution are binding from signature — and need separate, careful drafting because they are the only enforceable clauses if the deal collapses.

• Valuation Methodology & Cap Table Mechanics:: Pre-money vs post-money, ESOP pool location (pre-money is investor-friendly, post-money is founder-friendly), conversion mechanics for SAFE / CCDs / CCPS, treatment of secondary, escrow / holdback for indemnity, fully-diluted denominator definition. Each of these moves the founder ownership percentage by 50–200 bps without the headline number changing.

• Series A / B / C Conventions:: Series A typically establishes governance baseline — 1x non-participating preference, broad-based weighted average anti-dilution, standard tag / drag, founder vesting refresh. Series B / C tightens information rights, adds redemption / IPO trigger language, sometimes ratchets ESOP top-up — drafted to be additive to existing SHA, not contradictory.

• Exclusivity / No-Shop:: Window (typically 30–90 days), scope (full no-shop vs go-shop carve-out), break-fee, and survival on collapse — drafted to be enforceable but not predatory.

• Confidentiality & Public Announcement:: NDAs, restriction on disclosing existence of negotiations, joint press release timing, treatment of leaks.

• Conditions Precedent & Due Diligence Triggers:: Legal, tax, financial, technical / commercial DD scope; reps to be brought down at closing; satisfactory completion as a CP; right to walk on adverse findings.

• Governing Law & Dispute Resolution:: Indian law for Indian companies; arbitration seat (Mumbai / Delhi / Singapore / London for cross-border); fast-track procedure where appropriate.

Why Founders Get Term Sheets Wrong (And What It Costs)

Signing a term sheet without understanding which clauses are binding. Agreeing to ESOP pool pre-money without modelling the dilution. Accepting full-ratchet anti-dilution language in a market where broad-based is the norm. Allowing a 90-day exclusivity with no break-fee. Failing to push back on participating preference. Each of these is a 1–3% ownership swing for the founders, often more after Series B and C. We model the dilution, draft the architecture, and negotiate the binding clauses so the founder still has optionality through closing.