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What is a Term Sheet Drafting?

A term sheet is a binding / non-binding document that outlines the terms and conditions of a potential deal between two parties. It outlines the key terms and conditions, such as price, financing, and governance, that would be included in a formal agreement. A term sheet is typically used in the initial stages of negotiating a business transaction, such as a venture capital investment, acquisition, or partnership, and acts as a roadmap for further negotiations.

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What is Term Sheet?

A term sheet is a generally non-binding agreement.
It captures the basic terms and conditions of an investment.
It acts as a template for more detailed legal documents.
The term sheet serves as the basis for drafting legally binding agreements.
Once the parties agree on the terms, a binding contract is prepared.
The final agreement conforms to the details mentioned in the term sheet.

Contents of Term Sheet

The following clauses form part of a well drafted Term Sheet:-

Name of the company in which the investment is being made
Type of security to be issued
Conversation rate of convertible securities
Veto rights
Founder’s lock-in
Drag along
Tag along
Right of first refusal (ROFR)
Right of first offer (ROFO)
Reps & Warranties
Exit rights
Governing law an
d Dispute Resolution

Laws governing Term Sheet in India

The different laws which govern various aspects of Term Sheet in India are as follows:

Companies Act, 2013 and various rules framed thereunder
The Indian Contract Act, 1872
Foreign Exchange Management Act, 1999
Consolidated FDI Policy, 2020
RBI Policies
Competition Act, 2002
SEBI Guidelines (in case of listed company)

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Frequently Asked Question

A term sheet is an agreement that is executed between the prospective investor and the company. It is usually entered into before the process of due diligence begins and it lays a foundation on which the more definitive documents, such as Share Subscription and Shareholder's Agreement are prepared at a later stage.

A Term Sheet is usually non-binding document by the very nature of it. With that being said, nothing stops the parties from entering into a binding Term Sheet. In fact, a few clauses of the Term Sheet, such as governing law and dispute resolution, NDA, etc. are usually kept binding.

After the parties have executed the Term Sheet, the lenghty and crucial process of due diligence follows on the investee company, and afterwards, the parties enter into more definitive documents, such as Shareholder's Agreement, to give legal and binding effect to the investment.

No. It is not mandatory to enter into a Term Sheet. However, most investors and founders prefer to enter into a Term Sheet that lays out the foundation of the major terms, upon which the definitive documents are later prepared.

Usually, it is the investor who presents the Term Sheet to the founders of the investee company.

What our users have to say

We had a verbal investment offer but nothing was written down, which made us uncomfortable. Lawyaar drafted a detailed Term Sheet capturing valuation, equity dilution, and control rights. It gave both founders and investors clarity before moving ahead.

Abhishek Tandon, Noida

The investor’s draft term sheet was heavily biased against founders, and we didn’t understand many clauses. Lawyaar reviewed and redrafted the Term Sheet with balanced clauses, clearly explaining liquidation preference and veto rights. It helped us negotiate confidently.

Riya Chatterjee, Kolkata

We were confused about pre-money and post-money valuation mentioned in the investment discussions. Lawyaar converted everything into a clear Term Sheet with proper definitions and examples. It avoided confusion and future disputes.

Harsh Patel, Vadodara

Our angel investor wanted milestone-based funding, but we didn’t know how to document it. Lawyaar drafted a Term Sheet with clear funding tranches and performance triggers. Both sides agreed without friction.

Sandeep Reddy, Hyderabad

We were signing our first term sheet and didn’t know which clauses were binding. Lawyaar clearly separated binding and non-binding clauses and explained their impact. It prevented us from committing prematurely.

Neel Shah, Mumbai

The investor insisted on a high liquidation preference that could wipe out founder returns. Lawyaar renegotiated and redrafted the Term Sheet with more reasonable exit terms. It protected our long-term interests

Kunal Arora, Gurugram

Our startup had multiple co-founders, and we were worried about future control issues. Lawyaar drafted a Term Sheet that clearly defined board composition and voting rights. It ensured founder alignment from the start.

Mehul Doshi, Surat

We were raising funds from a foreign investor and needed the Term Sheet to reflect compliance aspects. Lawyaar included India-specific regulatory language and investment conditions. It made the document legally sound and investor-friendly.

Farah Siddiqui, Bengaluru

Our earlier funding discussion collapsed because expectations were not documented properly. Lawyaar helped us draft a clear, professional Term Sheet for the next investor. This time, negotiations moved smoothly to closure.

Aditya Kulkarni, Pune

Investors wanted exclusivity and no-shop clauses, but we were unsure of the implications. Lawyaar drafted a Term Sheet that limited exclusivity duration and protected us from being locked in unfairly. It gave us flexibility.

Pankaj Verma, Jaipur

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Term Sheet Drafting

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What is a Term Sheet Drafting?

How It Works

Choose your required Document & pay

Fill required details

Schedule Call with Lawyer

Delivery of your Document

What is Term Sheet?

Contents of Term Sheet

Laws governing Term Sheet in India

Why Lawyaar ?

Frequently Asked Question

How is Term Sheet used?

Is Term Sheet always non-binding?

What happens after the parties have executed Term Sheet?

Is it mandatory to enter into a Term Sheet?

Who prepares and presents the Term Sheet?

What our users have to say

Abhishek Tandon, Noida

Riya Chatterjee, Kolkata

Harsh Patel, Vadodara

Sandeep Reddy, Hyderabad

Neel Shah, Mumbai

Kunal Arora, Gurugram

Mehul Doshi, Surat

Farah Siddiqui, Bengaluru

Aditya Kulkarni, Pune

Pankaj Verma, Jaipur

Startup Documents

Term Sheet Drafting

₹3499

Deliverables *

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