Typically investors don’t want their term sheets be disclosed to other market participants to avoid price shopping. While venture investors are reluctant to sign any non-disclosure agreements, they do request that their privacy is protected when it comes to financial matters. It seems unfair if an entrepreneur uses a current offer as leverage to obtain a better proposal from unrelated third parties. The term sheet will usually state that it is a non-binding offer to start negotiations. However, the confidentiality clause is binding on both parties.
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