If you think of the ongoing relationship between you and an investor as a marriage, then you can regard the term sheet as the prenuptial agreement, whether the term sheet be with an angel investor or a venture capital investor (VC).

The purpose of the term sheet

The term sheet is the document that outlines the terms by which an investor (angel or venture capital investor) will make a financial investment in your company. Term sheets tend to consist of three sections: funding, corporate governance and liquidation. (For more details, please see Understanding a term sheet.)

MaRS has created a sample template of a term sheet to help streamline business for investors, founders and their respective legal advisors. While MaRS makes this document available for educational purposes and to facilitate the negotiation of terms between investors and startups, the template is yours to use at your own risk. Please see the disclaimer below.

Sample term sheet template

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