The exploding term sheet: What to do when a VC gives you 48 hours to decide
How to slow the clock, set boundaries, and still get the best deal on the table.
đ Hi, itâs Deirdre, and Iâm here with a đ„ edition of The Midnight Text, Forum Venturesâ bi-weekly newsletter that provides honest answers to the unspoken questions that keep founders awake at night.
Iâm a Managing Director at Forum Ventures, guiding portfolio founders on the zero to one journey. I was also the co-founder of Rightfoot, a fintech infrastructure company that has raised over $21M from top firms such as Bain Capital Ventures to enable the future of open banking. Iâve spent the past decade developing, selling, and distributing products nationally.
Up today: Exploding term sheets. How I slowed the clock, held the line, and still won the deal.
On a Wednesday afternoon, my cofounder & I got the email every founder wants: a term sheet from a firm we genuinely liked. But it came with a catch: they wanted an answer by Friday.
Two days to decide who weâd be partnered with for the next decade. We had partner meetings the following week with firms we also liked and the terms werenât quite where we needed them. And we had the classic founder fear: if we pass on this, what if nothing else comes?
Panic wanted the steering wheel. Instead, I called a few advisors. The best advice I got was simple and grounding: we have a fiduciary responsibility to run a fair process, and I also owe respect to the investor who put an offer on the table. Deadlines exist partly so founders donât shop their term sheet to other firms, which is valid. But I have also learned that in venture very few lines are truly fixed. With good communication, thereâs usually room to work.
While I am sure there are more, here are two paths Iâve seen in my journey.
Path One: Ask for time, keep your word, finish the process
We told the firm (kindly, clearly) that we were excited by the offer, and very seriously considering it, but not ready to sign by Friday. We committed not to shop their terms or share the term sheet. We asked for founder references and to regroup in 7â10 days. We kept an open line with them the whole time.
Behind the scenes, we updated the other firms: we had a term sheet on the table; we werenât shopping terms; and if they wanted to compete, we needed to know their process and timing. That alone created healthy urgency.
The first firm didnât retract the offer, we kept communication open. We completed our meetings. Ultimately, a larger firm came in with better terms and a higher valuation, and that was the term sheet we selected. Asking for this time extension gave us the chance to secure this more favorable deal, and by communicating openly with the original investors, we were able to close out conversations with them cordially. I continue to refer founders to them to this day given how respectfully they responded to our decision.
A version of the note we sent (feel free to steal this):
Weâre excited about your offer and genuinely enthusiastic about working together. Weâre not yet at a point in our process where we can make a responsible final decision by Friday. We owe it to the other firms who are deep in the process to close the loop, and we have a fiduciary responsibility to run a full process.
You have our word that we wonât shop your term sheet. In parallel, weâd love to keep moving on with diligence on our side. Could you introduce us to three founders youâve backed?
If it works on your end, letâs regroup in 7â10 days with a firm decision.
What I asked other firms:
We have a term sheet on the table. Weâre not shopping terms (as we wouldnât shop yours). How quickly can you complete your process, and what do you need from us to do that?
Why this works: enthusiasm + boundaries + specificity. No posturing. No threats. Just clarity.
Path Two: Trade speed for what the business actually needs
Another time, a founder I work with faced the same challenge. Term sheet on Thursday, exploding by Friday, for about 80% of the amount they wanted to raise. They wanted to say yes but believed the company would move faster with a slightly larger check. So they asked for the one change that mattered and offered speed in return.
A script you can adapt:
We want to work with you. If we increased the check from $X to $Y while holding dilution roughly flat, weâd be comfortable accelerating our decision. The additional capital will allow us to [increase growth in X way]. We still need founder references and to adjust [specific clause], but if that works we can sign by Monday.
They asked with kindness and specifics. The firm improved the offer. The founder asked again for the higher amount they had requested. The firm met them again. Deal closed. Both sides won.
Why this works: youâre not haggling for sport. Youâre tying a concrete ask to a concrete business need and giving a clear path to âyes.â They also had this conversation over the phone, and shared what
Do real diligence on the investor (even on a deadline)
Before you hire, you call references. Do the same with your lead. Youâre choosing a partner for ten years. Ask founders theyâve backed:
When things got hard, how did they show up?
Where did they add value beyond capital?
How fast do they move when you need help?
If you could change one thing about working with them, what would it be?
My bottom line
An exploding term sheet is not a trap. Itâs a signal that someone wants to win your deal. You can slow the clock to run a fair process. Or you can move quickly if you get what the business truly needs. In both cases: lead with clarity, be respectful, stay true to your word, and ultimately do whatâs best for the business. You got this.
â Deirdre
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