[claudiusd]

In general, the only "binding" part of the term sheet is the "no-shop clause", which doesn't let you solicit additional offers from investors, usually for 3 months. It otherwise represents a handshake on terms so that the VCs have time to perform diligence and produce the paperwork (which is substantial) while the founders find strategic investors to fill up the round.

Either party can still back out of the deal at any time, and this typically only happens when something bad emerges during the diligence process. It's important that startups can trust this fact because agreeing not to solicit investment for 3 months while (presumably) running low on cash is a pretty big risk. KPCB broke this trust in our case.

Feel free to email me at the address in my profile if you'd like to chat more.

[spitfire]

Thank you for being out in the open about this.

The VC's have a lot of money to run their PR machine, but no one ever hears the negatives about them. It's important to a functioning market that the information is out there.

[davidu]

Nothing about a term sheet is realistically very binding. That goes both ways. If you break the terms, there's generally little recourse for the other side.