All terms
Investment & FinanceStartup Lifecycle
Term Sheet
Non-binding outline of the key economic and control terms of an investment.
Reviewed by Christian Espinosa, Founder, Blue Goat CyberLast reviewed May 5, 2026
Definition
A term sheet summarizes the principal terms of a proposed financing - valuation, amount, security type, board composition, liquidation preference, anti-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 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
Related terms
Shared paths + categoryInvestment & Finance
Liquidation Preference
Right of preferred shareholders to be paid before common in an exit.
Same category
Investment & Finance
Milestone-Based Tranche
Investment paid in installments triggered by predefined milestones.
Same category
Investment & Finance
Pro-Rata Rights
Right of an existing investor to maintain ownership percentage in future rounds.
Same category
Investment & Finance
Convertible Note
Short-term debt that converts into equity at a future financing round.
Founder & Investor Primer · adjacent
Investment & Finance
Valuation Cap
Maximum company valuation at which a SAFE or note converts to equity.
Founder & Investor Primer · adjacent
Investment & Finance
Capitalization Table(Cap Table)
Ledger of all securities issued by a company and who owns them.
Founder & Investor Primer
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Primary references
3 sourcesLink health: 3 verified· last checked 2026-06-20
NVCA·1SVB·1PitchBook·1
- 1NVCA Model Term SheetVerifiedNVCAnvca.org
- 2Silicon Valley Bank - Healthcare ReportsVerifiedSVBsvb.com
- 3PitchBook - MedTech CoverageVerifiedPitchBookpitchbook.com
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