VCs bailing on signed term sheets

Via Trevor Loy (not a bailer) this story

We’ve heard three stories in which lead investors bailed on rounds after term sheets were signed.


The first upset came last week from a WeWork Labs company. The startup’s lead investor pulled out of a $500,000 round.

Another entrepreneur raised between $3 and $4 million and thought he was in the clear. The money was invested, but there was a draw-back clause on the term sheet.  The investor retracted all of the money 30 days later.

Today, we heard from Rand Fishkin, cofounder of SEOMoz, who had $24 million taken back after term sheets were signed.

Fishkin says “everything was signed” with his investor in August

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People tend not to note the non-binding nature of term sheets – non-binding on one side.