VC Term Sheet in India 2026: What Every Clause Actually Means
A term sheet is the document that defines your company's ownership structure and investor rights for the next decade. Most Indian founders sign term sheets they do not fully understand. This is the plain-language guide.
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“The valuation cap and the liquidation preference together determine how much founders receive in an exit scenario. A high valuation with a 2x liquidation preference can produce worse founder outcomes than a lower valuation with a 1x non-participating preference.”
“The anti-dilution provision type is the most financially consequential clause in a term sheet for future rounds. Full ratchet can decimate founder equity in a down-round. Weighted average broad-based is the market standard that founders should insist on.”
“The ESOP pool size and whether it is pre-money or post-money affects founder dilution more than most founders realize. A 15 percent post-money ESOP pool is equivalent to diluting all existing shareholders by 15 percent before any investor money comes in.”
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Amit Tyagi
Founder, AletheiaAI & GP, Fitoor Capital
Veteran of India's startup ecosystem. Writing about fundraising, investor psychology, and what it takes to build fundable startups in India.
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