Deal Terms
No-Shop Clause
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.