Deal Terms
No-Shop Clause
Last updated
Quick Answer
A provision in a term sheet that prevents a startup from soliciting competing offers from other investors for a defined period — typically 30-60 days.
A no-shop clause (or exclusivity clause) prohibits a startup from soliciting, encouraging, or entertaining offers from other investors for a specified period after signing a term sheet. Typical no-shop periods are 30-60 days. The purpose: once a VC has invested significant time and resources in due diligence, they want protection against the startup using their term sheet to shop for a better deal. Violating a no-shop creates serious reputational damage in the tight-knit VC community. No-shop clauses are one of the few binding provisions in an otherwise non-binding term sheet. For founders: the no-shop period should be long enough for the investor to complete diligence and close the deal, but not so long that it prevents you from pursuing alternatives if the deal falls apart.
Related Concepts
Further Reading
VC Term Sheet Template & Guide: Every Clause Explained with Examples
A clause-by-clause breakdown of every standard VC term sheet provision — what each term means, what's market, what to negotiate, and the red flags that cost founders millions.
How a Series A Actually Works: From First Meeting to Wire Transfer
The Series A process is opaque, exhausting, and often takes three to six months. Here's exactly what happens at every stage — from the first intro email to the moment the money hits your account.
What a Series A Process Actually Looks Like
The Series A is where fundraising gets real — partner meetings, deep diligence, and term sheet negotiations. Here's a realistic week-by-week breakdown of what to expect.
How to Negotiate Your Term Sheet: A Founder's Playbook
A tactical guide to negotiating your startup term sheet — which terms matter most, where to push back, and how to protect your interests without killing the deal.
How to Read a Term Sheet: A Practical Breakdown
Term sheets aren't designed to be readable. Here's a section-by-section guide to what matters, what's standard, and what should make you walk away.
Term Sheet Explained: Every Clause Founders Must Know
Term sheets are dense, jargon-heavy, and consequential. Here's a founder-friendly breakdown of every major clause and what it means for your company.
Frequently Asked Questions
What is No-Shop Clause in venture capital?
A no-shop clause (or exclusivity clause) prohibits a startup from soliciting, encouraging, or entertaining offers from other investors for a specified period after signing a term sheet. Typical no-shop periods are 30-60 days.
Why is No-Shop Clause important for startups?
Understanding No-Shop Clause is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does No-Shop Clause fall under in VC?
No-Shop Clause falls under the deal-terms category in venture capital. This area covers concepts related to the financial and legal terms that define investment agreements.
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