{"id":196383,"date":"2026-03-19T07:13:49","date_gmt":"2026-03-19T07:13:49","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=196383"},"modified":"2026-03-24T02:54:09","modified_gmt":"2026-03-24T02:54:09","slug":"term-sheets-raising-capital","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/term-sheets-raising-capital\/","title":{"rendered":"Term Sheets: Legal Safeguards When Raising Capital"},"content":{"rendered":"\n

Raising capital is one of the most important and potentially stressful stages for a business. Whether you are a startup founder or a growing SME, securing investment means bringing new people into your company and giving away a slice of ownership. To make sure everyone is on the same page, investors and founders usually start with a term sheet.<\/p>\n\n\n\n

In this article, we will look at what a term sheet is, which parts are legally binding, and how it protects both sides – with clear explanations of the legal terms you will see along the way.<\/p>\n\n\n

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Corporate Governance Guide for SMEs in the UK<\/div>\n
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This guide will help you to understand your corporate governance responsibilities as a director, including the decision-making processes<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n

What is a Term Sheet?<\/h2>\n\n\n\n

A term sheet is a short, usually non-binding document that sets out the main terms of an investment deal. It is like a handshake in writing – a way for founders and investors to agree on key points before spending time and money on detailed legal contracts.<\/p>\n\n\n\n

Term sheets are common in equity financing<\/a>, where investors receive shares for their money. They are widely used in UK venture capital and angel investing.<\/p>\n\n\n\n

Which Parts are Legally Binding?<\/h2>\n\n\n\n

Most of a term sheet is not legally binding – it is just an agreement in principle. However, there are usually a few important clauses that are often made legally binding:<\/p>\n\n\n\n