A Term Sheet outlines key financial data and terms by a venture capital firm to a private company. It is a preliminary and conditional agreement. Those key terms are the basis for investment documents that follow. Except for certain clauses (e.g., confidentiality, exclusivity, costs and break-up fees), Term Sheets are not intended to be legally binding. They are negotiable and usually contain certain conditions which need to be met before the investment is completed, known as conditions precedent. The Subscription Agreement contains details of the investment round, including the number and class of shares subscribed for, payment terms, representation of shareholders and warranties about the condition of the private company and its key assets. These representations and warranties will usually be qualified by a disclosure letter and supporting documents that specifically point out any issues that the founders believe the investors should know prior to the completion of the investment.