Make it illegal for investors to offer a term sheet without proof of funds.

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Make it illegal for investors to offer a term sheet without proof of funds.

Petition Details

Currently investors are able to sign a term sheet (contract outlining the terms of a funding deal) with founders without having to prove they have the funds first.

Additional Information

Although a TS is not legally a promise to invest, it is a contract promising interest and due diligence with exclusivity periods meaning founders can't approach other investors. This means anyone can pretend to have life-changing sums of money to hand to a founder, should they choose to invest it. As a result, businesses can wait many months or even years for the funding to appear, ultimately bankrupting the business and in turn the founder.

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