A term sheet is a nonbinding (sometimes binding) agreement that outlines the financial terms and conditions of an investment, acquisition or business agreement. It opens up future negotiations between two parties, lays out the financial terms of the investment, it plainly states how much the startup is “worth”, and outlines the various provisions or requirements that accompany the investment.Before signing a term sheet, discuss it with your legal council so that you understand the outlined provisions and their potential implications. Some of the particular provisions to pay attention to include: pay-out provisions, liquidation preferences, option pools and board seat requirements.