It is typically two to five pages and reads like a summary: how much is being invested, at what valuation, what class of shares, who joins the board, and what rights the investor gets if things go well or badly. Only a few clauses — exclusivity and confidentiality, usually — are legally binding. The rest is intent. But that intent is what the definitive documents get built from, so a term sheet signed casually is very hard to unwind later.
For a founder, the trap is fixating on valuation. Valuation is the headline; control and preference are the plot. A liquidation preference decides who gets paid first in a sale. Pro-rata rights decide who can keep their percentage in later rounds. Board composition decides who can fire you. A higher valuation with a 2x participating preference can be worth less to you than a lower one on clean terms, and the term sheet is where that is settled.
A concrete example: an investor offers $750,000 at a $5,000,000 pre-money valuation — roughly 13% of the company post-money. The sheet also specifies a 1x non-participating liquidation preference and one board seat out of three. That means if the company sells, the investor takes their $750,000 back before common shareholders get anything, or converts to shares if that pays more, and they hold a third of the votes on major decisions. Both are ordinary. Both are worth reading twice before signing.