What is a no-shop clause?

A no-shop clause commits the company, once a term sheet is signed, not to solicit or negotiate competing offers for a set period — usually 30–45 days — while the investor completes diligence and documents. It is one of the few binding parts of a term sheet.

The founder's negotiation is duration: long exclusivity plus a slow investor equals a stalled raise with expired momentum. Competing offers must be surfaced before signing, which is why founders try to bring parallel processes to a head at the same time.