A no-shop clause is a term sheet provision that restricts founders from soliciting or accepting competing investment offers during a defined exclusivity period. The period is typically 30-60 days from term sheet signing. Investors use it to protect their commitment investment (in time and diligence resources) by ensuring the deal will close with them rather than being used as leverage to attract higher offers. The clause is standard in venture term sheets but the specific terms (duration, exceptions, breakup fees) are negotiable. It's the structural constraint that turns "interested investor" into "exclusive partner during closing."
The standard structure:
Duration: typically 30-60 days from term sheet signing.
Scope: restric...