Can a deal with a VC fall apart after a term sheet has been signed?


1

Is it possible for a fund raising deal with a venture capitalist to fall apart after a term sheet has been executed?

If so, what are some common reasons why deals fall apart at this stage?

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asked Apr 29 '14 at 16:56
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Mary Campbell
7 points
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1 Answer


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That depends on what you mean by "term sheet has been executed".

If you mean that a startup has been given a term sheet by a VC - then yes, everything can still fall apart quite easily - for one, due diligence hasn't yet been completed. More specifically, term sheets are usually non-binding, often have conditional clauses, and of course, the VC is usually the party with the most leverage/power.

Rand Fishkin of (seo)Moz wrote an excellent post about his adventures in exactly this scenario: http://moz.com/rand/misadventures-venture-capital-funding/

answered Apr 30 '14 at 07:09
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Nick Stevens
4,436 points
  • That Rand Fishkin article is a long, but interesting read. Thanks for pointing it out, Nick! – rbwhitaker 6 years ago

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