Single term sheet review
One investor's term sheet, full memo + negotiation strategy.
- Clause-by-clause memo
- Negotiation script
- Pro-forma cap-table
Term Sheet Review
Term sheet review Know which clauses bind you, and what each one costs you at exit.
A term sheet is the blueprint of the round. Anti-dilution, liquidation preference, drag rights, founder vesting and ESOP top-up - each clause has a dollar value at exit. We review every clause from a founder lens.
Reviewed by CA Ganpat Khemka · Last updated 24 September 2026
Fee quoted after we see the term sheet. Nothing starts before you approve it.
Reviewed by a Chartered AccountantBefore you signBest for: Founders closing seed / Series A rounds
Fee
On quote after we see the term sheet
Term Sheet Review
Founders closing seed / Series A rounds
Clause-by-clause memo
Negotiation playbook
Anti-dilution + liquidation
Pro-forma cap-table impact
Timeline
Before you sign
What it is
Term Sheet Review, explained in plain English.
Term sheet review is a clause-by-clause analysis of the investor's term sheet, with negotiation suggestions and impact modelling. Common clauses we negotiate: valuation, ESOP top-up, liquidation preference, anti-dilution, drag-along, tag-along, board seats, founder vesting and investor consent matters.
If the term sheet asks for founder vesting the founders never agreed between themselves, settle it first in a founders agreement. Once the term sheet is signed, the shareholders agreement is one of the definitive documents that carries its terms.
Routes & scenarios
Match the situation to the right fix.
Multi-term-sheet comparison
Multiple investors competing - choose the best terms not just the best valuation.
- Side-by-side comparison
- Optionality vs cost trade-off
- Walk-away levers identified
What actually binds you when you sign
A term sheet is mostly an agreement to agree. A few clauses bind you the moment you sign, and those are the ones to read first.
Almost every term sheet carries a binding-effect clause that names which provisions are legally binding and which are subject to definitive documents. Read that clause before you read anything else, because it decides how much of the rest you can still change.
- Usually binding: confidentiality, exclusivity or no-shop, and who bears costs if the deal does not close. Sometimes governing law and dispute resolution.
- Usually not binding: valuation, the amount, liquidation preference, anti-dilution, board composition, veto rights and everything else that makes up the economics. Those take effect only through the share subscription agreement and the shareholders agreement.
That split is what makes exclusivity the expensive clause. A 60 or 90 day no-shop means you cannot talk to another investor while the investor's team does diligence, and if they walk away at the end of it you restart the fundraise months later with a thinner bank balance. We look at the length, the carve-outs and whether it lapses automatically.
Two other points founders miss. A non-binding valuation is still an anchor: once it is written down, moving it needs a reason, not an argument. And a term sheet that says nothing about a clause is not silent in your favour, because the investor's standard SSA and SHA will fill the gap with their own position.
The clauses that decide the round
Fourteen clauses do almost all the work. Here is what each one means, and what we push for.
| Clause | What it does | The founder position we test |
|---|---|---|
| Valuation, pre-money or post-money | Pre-money is the value before the investment; post-money adds the money in. The same ₹20 crore valuation gives you different ownership depending on which one is meant | Fix the definition in writing. Confirm your ownership by working backwards from the shareholding table, not from the valuation number |
| Amount and tranches | How much comes in, and whether it lands in one go or against milestones | A tranche that depends on a milestone is a milestone you must be able to hit, and the term sheet should say what happens if you miss it |
| Instrument | Equity shares, compulsorily convertible preference shares (CCPS) or compulsorily convertible debentures (CCDs) | CCPS and CCDs carry their own conversion mechanics. For a non-resident investor the conversion price or formula has to be fixed upfront under FEMA |
| Option pool | The ESOP pool the round assumes | Whether the pool is created pre-money or post-money decides who is diluted by it. A pre-money pool dilutes only the existing shareholders |
| Liquidation preference | Who is paid first on an exit and how much | 1x non-participating is the market-standard founder position. A multiple, or participation on top of the preference, changes what you receive at every exit value |
| Anti-dilution | Protects the investor if you later issue shares at a lower price | Broad-based weighted average, not full ratchet. Ask for the standard carve-outs: ESOP issues, bonus issues, conversions already agreed |
| Board composition | How many directors each side appoints, and who chairs | Keep the founders able to pass an ordinary board resolution on day-to-day matters. Watch for an independent director whose appointment the investor controls |
| Reserved matters and veto rights | The list of decisions that need the investor's consent | The list is always long. Work on the items that touch the operating business: budgets, hiring, borrowing, new products. Accept the ones that protect the investor's money |
| Information rights | What you must report, and how often | Agree a format and a deadline you can actually meet every month. Unrealistic reporting becomes a default later |
| Pro-rata and right of first refusal | The investor's right to keep its percentage in later rounds, and to buy shares you want to sell | Reasonable in both directions, but check the notice periods: a 30 day ROFR process sitting in front of a secondary sale can kill the sale |
| Drag-along and tag-along | Drag lets a majority force everyone into a sale. Tag lets a minority join a sale on the same terms | Set the drag threshold high enough that founders are part of any decision to sell. Tag should be available to founders too |
| Founder vesting and reverse vesting | Founder shares are earned over time, or can be bought back if a founder leaves early | Ask for credit for time already served, a cliff you can live with, and acceleration on a change of control. Confirm what happens on death, disability and termination without cause |
| Exclusivity and no-shop | You stop talking to other investors for a fixed period | Keep it short, tie it to the diligence timetable, and make it lapse automatically if the investor does not proceed |
| Conditions precedent and indemnity | What must be true before the money comes in, and what you promise about the company | Read the CP list as a work plan with dates. Personal founder indemnities are the item to negotiate hardest |
The two clauses that change what you actually receive
Liquidation preference and the option pool are arithmetic, not opinion. Work the numbers before you argue about the valuation.
Liquidation preference. Take an investor that has put in ₹5 crore for 20 per cent, on a 1x non-participating preference. On an exit, the investor takes the higher of its preference and its shareholding.
| Exit value | Investor takes (1x non-participating) | Investor takes (1x participating) | Difference to the other shareholders |
|---|---|---|---|
| ₹10 crore | ₹5 crore, the preference | ₹5 crore plus 20% of ₹5 crore, so ₹6 crore | ₹1 crore |
| ₹25 crore | ₹5 crore, still the preference | ₹5 crore plus 20% of ₹20 crore, so ₹9 crore | ₹4 crore |
| ₹100 crore | ₹20 crore, the shareholding | ₹5 crore plus 20% of ₹95 crore, so ₹24 crore | ₹4 crore |
One word, participating, moves money at every exit value. A 2x preference moves more, and it moves most in the mid-range outcomes that are the likeliest ones.
The option pool. A 10 per cent pool created before the money comes in is carved out of the existing shareholders, so the founders pay for the option pool the investor asked for. Created after the money comes in, everyone including the new investor is diluted by it. On a ₹5 crore round the difference is a meaningful slice of founder equity, and it is usually settled in one sentence of the term sheet.
Ask two questions. How large does the pool need to be for the hiring plan you have actually agreed, rather than a round number, and is it pre-money or post-money. If the pool must be pre-money, negotiate the size down to the plan. Our ESOP scheme drafting work starts from that hiring plan rather than from a percentage.
The higher valuation is not always the better deal
When you have two term sheets, compare them on what you end up with, not on the headline number.
A ₹24 crore pre-money term sheet with a 2x participating preference, a 12 per cent pre-money option pool and a long reserved matters list can leave a founder worse off, and less in control, than a ₹18 crore pre-money term sheet with 1x non-participating, a pool sized to the hiring plan and a short veto list. The headline valuation is the number that gets repeated on a founder WhatsApp group. It is not the number that decides your outcome.
We compare term sheets on five things, in this order.
- Your ownership after the round, worked out from the shareholding table and not from the valuation, with the option pool counted where it actually falls.
- Your proceeds at a range of exit values, after the liquidation preference has been applied.
- Control, meaning board seats plus the reserved matters list read together, because one without the other tells you nothing.
- Conditions and timing, meaning the conditions precedent, the tranches, the exclusivity period and how long the investor's process realistically takes.
- What each investor brings besides money, and whether the term sheet reflects it or simply assumes it.
The comparison has a second use. It shows you which clauses each investor cares about, and therefore which ones the other one is likely to move on. That is the most useful thing you can take into a negotiation call.
Red flags we look for
| Red flag in the term sheet | Why it matters |
|---|---|
| A liquidation preference above 1x, or participating | Changes your proceeds at every exit value, most of all in a moderate exit |
| Full ratchet anti-dilution | One down round can reprice the investor's whole holding and move control |
| A veto over the annual budget or over hiring | Turns a shareholder into a co-manager of the operating business |
| A pre-money option pool larger than the hiring plan needs | Founder dilution for a pool nobody will use |
| Founder vesting starting from the date of the investment, with no credit for time served | You re-earn shares you have already earned |
| Exclusivity longer than the diligence timetable, with no automatic lapse | Your leverage goes, and the clock keeps running if the investor slows down |
| A drag-along the investor can trigger alone | A sale can be forced at a price the founders would not accept |
| A broad personal indemnity from the founders | Company risk moved onto your personal balance sheet |
| No cap on the investor's transaction costs | You pay an open-ended bill out of the money you raised |
| Board control combined with a long reserved matters list | Control changes hands on economics that still look founder-friendly |
| Conditions precedent that depend on third parties | The money waits on approvals you do not control |
| Silence on a clause the investor's standard documents cover | The gap is filled later on their terms, not yours |
Term sheet review fees
Our fee is on quote, because a seed term sheet with one investor and a Series A with three investors and an existing shareholders agreement are not the same piece of work.
| Service | Regikart fee |
|---|---|
| Term sheet review: binding-effect analysis, clause by clause memo, cap table and exit modelling, and a call to agree your positions | On quote after we see the term sheet |
| Comparison of two or more term sheets, side by side | On quote |
| Joining the investor negotiation call | Scoped and quoted separately |
| Post-signing work: due diligence support, valuation, SSA and SHA input, allotment and FC-GPR reporting | Quoted separately, per engagement |
| Government fee on a term sheet review | None. A term sheet is a private document and nothing is filed with any authority |
Professional fees exclude GST at 18%. There is no government fee for a term sheet review. Government fees arise later in the round, at the allotment and reporting stage, and are shown separately at that point. Fees verified on 24 September 2026.
Send us the term sheet and the cap table and you get the fee before the work starts. We do not begin a review on an open-ended basis.
Send it before you sign
Email the term sheet and your cap table. You get the scope, the fee and the first read of what is binding.
The process
From the first read to the signed term sheet
01
Read & flag
We read the term sheet against the binding-effect clause first, then clause by clause, and flag everything that changes control, price or your exit proceeds.
02
Pro-forma model
We model the cap table after the round and the proceeds split at a range of exit values, including the effect of the liquidation preference and the option pool.
03
Negotiation memo
A clause by clause memo with suggested counter-asks, ranked by what each one is worth to you.
04
Founder call
A call to walk through every clause and agree your positions. Whether we join the investor call is agreed and priced case by case.
Documents required
What we'll need from you.
Send these across before the first call. Nothing here is filed anywhere: the documents are what the review is built on.
Investor term sheet (draft)
Cap table
Existing investor / SHA documents
Latest valuation
Round target + timeline
Founder priorities (ranked)
After the term sheet: what has to happen before the money lands
Signing the term sheet starts the work. This is the sequence, and it is where the statutory deadlines are.
| Step | What happens | The rule to get right |
|---|---|---|
| Due diligence | The investor's team reviews financials, tax, statutory registers, contracts, IP and people. Use a financial due diligence exercise on your own numbers first if the books have never been looked at from outside | Findings become conditions precedent or price adjustments, so fix what you can before the data room opens |
| Valuation | For a preferential allotment under section 62(1)(c) of the Companies Act, 2013, the price is determined on the basis of a registered valuer's report | Rule 13(2)(g) of the Companies (Share Capital and Debentures) Rules, 2014. See Rule 11UA valuation |
| FEMA pricing, for a non-resident investor | The issue price must be not less than the fair value worked out on an internationally accepted pricing methodology, on an arm's length basis, certified by a Chartered Accountant, a SEBI-registered merchant banker or a practising cost accountant | The valuation certificate must not be more than 90 days old as on the date of the investment. For CCPS or CCDs, the conversion price or formula is fixed upfront and the conversion price is not lower than the fair value at issue |
| Definitive documents | Share subscription agreement and shareholders agreement, drafted by legal counsel. Clauses that bind the company, such as reserved matters, ROFR and drag-along, go into the articles of association as well | The shareholders agreement does the work the term sheet only sketched |
| Board and shareholder approvals | Board resolution, special resolution for the preferential allotment, and the private placement offer letter | Under section 42 of the Companies Act, 2013, shares must be allotted within 60 days of receipt of the application money; if not, the money is refunded within 15 days after that, and interest runs at 12 per cent a year from the 60th day |
| Money in, shares out | Funds into the bank account, board allotment, share certificates, and the register of members updated | PAS-3 is filed with the Registrar within 15 days of allotment |
| FEMA reporting, for a non-resident investor | Form FC-GPR on the RBI FIRMS portal, through the Single Master Form | Within 30 days of allotment. Late filing attracts a Late Submission Fee of ₹7,500 plus 0.025 per cent of the amount for each year of delay. See FC-GPR filing |
| Post-round housekeeping | ESOP pool approved and granted, updated cap table, information-rights reporting pack, increase in authorised share capital where the allotment needs headroom | Missing the authorised capital headroom is the most common reason an otherwise agreed allotment slips |
One tax point worth stating plainly: angel tax under section 56(2)(viib) of the Income-tax Act, 1961 was abolished for all classes of investors from Assessment Year 2025-26, so a premium above fair value no longer triggers that charge. See our angel tax position. Valuation still matters, for the Companies Act, for FEMA and for the sections that tax transfers of unquoted shares. For FY 2025-26 (AY 2026-27) the 1961 Act applies, and from Tax Year 2026-27 the Income-tax Act, 2025 applies, as it came into force on 1 April 2026.
Term Sheet Review FAQ
Common questions about term sheets
Have a term sheet in hand? Send it across and we will tell you what is binding and what we would push back on.
Still have questions about your term sheet?
Call or WhatsApp +91 70444 94804, or email the term sheet to [email protected].
Send my term sheet →Only in part. Most term sheets carry a binding-effect clause that names which provisions bind on signing, and confidentiality, exclusivity or no-shop, and costs are usually the ones that do. The economics, including valuation, liquidation preference, anti-dilution and board composition, normally take effect only through the share subscription agreement and the shareholders agreement. Read your own binding-effect clause first.
Ready when you are
Get a second opinion on your term sheet, before you sign it.
Send the term sheet and the cap table. We confirm scope and the fee before the review starts.
Call or WhatsApp +91 70444 94804, or email [email protected]. Offices in Kolkata, Delhi and Bengaluru.