No-Shop Clause
A binding term sheet provision preventing the company from soliciting or negotiating with other investors for a set period.
A no-shop (or exclusivity) clause is typically the one binding provision in an otherwise non-binding term sheet. It commits the company, for a defined window — commonly 30 to 60 days — not to solicit, encourage, or negotiate competing investment offers while the lead investor completes diligence and finalizes legal documents.
The clause exists because diligence and legal work are expensive and time-consuming for investors, and no lead wants to invest that effort only to be outbid at the last minute. For founders, signing a no-shop means giving up leverage from competing offers for the duration of the exclusivity period, which is why the term sheet itself should already reflect the best terms achievable.
Negotiate the no-shop window as short as reasonably possible (30 days, not 90) and make sure diligence and legal timelines are realistic within it — a long exclusivity period with a slow-moving investor can strand a company if the deal ultimately falls apart.
Can a founder keep talking to other investors after signing a no-shop?
No — a no-shop clause is legally binding and typically covers even passive discussions about a competing round; violating it can expose the company to legal claims from the lead investor.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.