Should investors be bound to honor commitments they make during a fundraising process, such as signed term sheets?
7 recorded positions from 4 people, first published Nov 2005. They do not agree — the readings below are what each one actually argued.
Signed term sheets should be honored and closed
Jack Zhang · published May 27, 2025
Matrix should have honoured and closed the deal once they had signed the term sheet
31:58 20VC: The Most Insane Story in Startups: Airwallex: The Angel That Turned $1M into $1BN | The Fund That Pulled a Term Sheet & Lost $1BN | Rejecting Stripe's $1.2BN Offer | Scaling to $1BN in Revenue & 100% YoY Growth for 8 Years with Jack Zhang
Harry Stebbings · published May 27, 2025
Pulling a term sheet after signing it is appalling behaviour for an investor
32:02 20VC: The Most Insane Story in Startups: Airwallex: The Angel That Turned $1M into $1BN | The Fund That Pulled a Term Sheet & Lost $1BN | Rejecting Stripe's $1.2BN Offer | Scaling to $1BN in Revenue & 100% YoY Growth for 8 Years with Jack Zhang
Withholding funds after signing is unacceptable even in weaker markets
Tom Blomfield · published May 13, 2024
Bad investor behaviour is widespread — signing a safe and then refusing to wire until the round is full, or imposing onerous founder-time obligations, are the typical patterns
Once a handshake protocol offer is agreed and the safe signed, the money should be wired straight away; conditioning it on the round filling or demanding recurring meetings abuses founders
34:40 20VC: Behind the Scenes at Y Combinator: The Interview Process | What the Best & Worst Do in the Program | Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups | Why the Value is in Application Layer AI with Tom Blomfield
Jack Zhang · published May 27, 2025 · hedged
A VC signing a term sheet and then withholding the wire for five months while demanding repeated demos would be unacceptable behaviour today, even if the 2015 market made it more understandable then
Market conditions in 2015 were weaker, but the norms have moved on
Scope: conceded it was a different market in 2015
46:21 20VC: The Most Insane Story in Startups: Airwallex: The Angel That Turned $1M into $1BN | The Fund That Pulled a Term Sheet & Lost $1BN | Rejecting Stripe's $1.2BN Offer | Scaling to $1BN in Revenue & 100% YoY Growth for 8 Years with Jack Zhang
Inexperienced investors are more likely to renege though top tier firms sometimes do too
Paul Graham · published Nov 2005
Second- and third-tier VC firms break term sheets far more often than top firms, sometimes as often as half the time.
source How to Fund a Startup
Paul Graham · published Sep 2013
Inexperienced investors are the most likely to renege on commitments, though even top-tier VC firms sometimes do.
Established investors have learned to treat saying yes as irrevocable and have more brand to preserve.
source How to Raise Money
Also on the record
Harry Stebbings · published May 27, 2025
2015 is too recent to excuse that investor behaviour as a product of a different era
It was only nine years ago, not twenty
46:47 No era is old enough to excuse reneging on commitments
Your assistant can query this graph directly — 7 positions here, 19,646 across the corpus. Add 996.fm over MCP.