--- title: "Term Sheet, Definition | MedTech Terms" description: "Non-binding outline of the key economic and control terms of an investment. 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[Home](/) 2. / 3. [Terms](/terms) 4. / 5. [Investment & Finance](/terms?cat=Investment%20%26%20Finance) 6. / 7. Term Sheet [All terms](/terms) Investment & Finance [Startup Lifecycle](/ecosystems/startup-lifecycle) # Term Sheet Non-binding outline of the key economic and control terms of an investment. Reviewed by [Christian Espinosa, Founder, Blue Goat Cyber](/authors/christian-espinosa) Last reviewed May 5, 2026 ## Definition A term sheet summarizes the principal terms of a proposed financing - valuation, amount, security type, board composition, [liquidation preference](/terms/liquidation-preference), anti- [dilution](/terms/dilution), protective provisions - before counsel drafts definitive documents. ## What this means in practice In MedTech, term sheets often include milestone-based tranches tied to regulatory or clinical events (e.g., Tranche 2 releases on [IDE](/terms/ide) approval). Founders should focus as much on control terms (board, protective provisions) as on valuation. ## Examples - A Series B term sheet for a $40M round with a $120M pre-money, 1x non-participating preferred, and a 2-of-5 board with one independent director. Common pitfalls - • Optimizing only for valuation and ignoring liquidation preferences, participation, or protective provisions. - • Signing exclusivity (no-shop) without a clear timeline. ## Cross-references ### Contains Sub-elements or required artefacts of this term. - [ Liquidation Preference ](/terms/liquidation-preference) - [ Preferred Stock ](/terms/preferred-stock) ## Related terms Grouped by theme ### Editor's picks · Hand-selected related concepts [ Investment & Finance Liquidation Preference Right of preferred shareholders to be paid before common in an exit. ](/terms/liquidation-preference)[ Investment & Finance Milestone-Based Tranche Investment paid in installments triggered by predefined milestones. ](/terms/milestone-tranche)[ Investment & Finance Pro-Rata Rights Right of an existing investor to maintain ownership percentage in future rounds. ](/terms/pro-rata-rights) ### Founder & Investor Primer · From this learning path [ Investment & Finance Convertible Note Short-term debt that converts into equity at a future financing round. Adjacent lesson ](/terms/convertible-note?from=founder-and-investor-primer)[ Investment & Finance Valuation Cap Maximum company valuation at which a SAFE or note converts to equity. Adjacent lesson ](/terms/valuation-cap?from=founder-and-investor-primer)[ Investment & Finance Capitalization Table(Cap Table) Ledger of all securities issued by a company and who owns them. ](/terms/cap-table?from=founder-and-investor-primer)[ Investment & Finance Due Diligence Investigation of a company before an investment, financing, or acquisition. ](/terms/due-diligence?from=founder-and-investor-primer) ### More in Investment & Finance · Same category [ Investment & Finance Exit Multiple Valuation ratio applied at exit, e.g., enterprise value to revenue. ](/terms/exit-multiple) Cited by Where this term appears across MedTech Terms. Learning paths (1) - [Founder & Investor Primer](/paths/founder-and-investor-primer)Lesson 9 of 16 Ecosystems (1) - [Startup Lifecycle](/ecosystems/startup-lifecycle) ## Primary references 3 sources Link health: 3 verified · last checked 2026-06-20 NVCA· 1 SVB· 1 PitchBook· 1 1. [1 NVCA Model Term Sheet Verified NVCA · nvca.org ](https://nvca.org/model-legal-documents/) 2. [2 Silicon Valley Bank - Healthcare Reports Verified SVB · svb.com ](https://www.svb.com/trends-insights/) 3. [3 PitchBook - MedTech Coverage Verified PitchBook · pitchbook.com ](https://pitchbook.com/news/articles/topic/healthtech) Inline markers like \[1\] jump to the matching reference above. Sponsor note ### Diligencing a MedTech cybersecurity posture? Blue Goat Cyber supports investors and acquirers with cybersecurity diligence on connected MedTech assets. [Book a 30-minute discovery session](https://go.bluegoatcyber.com/meetings/blue-goat-cyber/discovery-session) - No obligation - Expert-led from minute one - NDA available on request MedTech Terms is a community resource sponsored by [Blue Goat Cyber](https://bluegoatcyber.com). Definitions are independent of any vendor. On this term Category Investment & Finance Sources 3 Updated 5/5/2026 [Compare with another term](/compare?a=term-sheet) Learn in 60 seconds Card Lesson Quiz Non-binding outline of the key economic and control terms of an investment. - · In MedTech, term sheets often include milestone-based tranches tied to regulatory or clinical events (e.g., Tranche 2 releases on IDE approval). - · Founders should focus as much on control terms (board, protective provisions) as on valuation. Remember this Watch out: Optimizing only for valuation and ignoring liquidation preferences, participation, or protective provisions. Related terms - [Liquidation Preference ](/terms/liquidation-preference) - [Pro-Rata Rights ](/terms/pro-rata-rights) - [Milestone-Based Tranche ](/terms/milestone-tranche) You may also need Auto-suggested from Investment & Finance and shared keywords. - [Preferred Stock ](/terms/preferred-stock) - [Series A / B / C Financing Rounds ](/terms/series-funding) - [Post-Money Valuation ](/terms/post-money-valuation) - [Pre-Money Valuation ](/terms/pre-money-valuation) - [Due Diligence ](/terms/due-diligence) - [Liquidity Event ](/terms/liquidity-event) [All Investment & Finance terms](/terms?cat=Investment%20%26%20Finance) MedTech Terms An authoritative, plain-language reference for the regulatory, quality, cybersecurity, and software terms that shape modern medical devices. Browse - [All terms](/terms) - [A–Z index](/a-z) - [Categories](/categories) - [Ecosystems](/ecosystems) - [Learning paths](/paths) - [Compare terms](/compare) - [Quiz](/quiz) Resources - [FDA Medical Devices](https://www.fda.gov/medical-devices) - [EU MDR](https://eur-lex.europa.eu/eli/reg/2017/745/oj) - [IMDRF](https://www.imdrf.org/) - [Methodology](/methodology) - [Changelog](/changelog) - [Editor: Christian Espinosa](/authors/christian-espinosa) - [About this site](/about) © 2026 MedTech Terms. Reference content for educational purposes - not regulatory advice. A community resource sponsored by [Blue Goat Cyber](https://bluegoatcyber.com)