A few provisions that are included in most term sheets, but fall into the category of "boilerplate," are representations and warranties, and conditions to closing. Below are the basics, and things to keep in mind:

Representations and Warranties: Generally a term sheet will require "standard representations and warranties by the Company," which require the company to verify that certain information is true at the time the company is entering the agreement - e.g., that the company is properly formed, that it isn't being sued, and that it owns all of the IP it claims to own. Investors can get their money back if the representations turn out to be untrue.

Watch out for founders' representations. If a term sheet also requires representations and warranties by founders themselves, this is a red flag. Unless there is a particular reason why the investors are requesting founder representations - e.g., the founders are selling some of their shares or getting money in the deal - the company should push back.

Conditions to Closing: The conditions to closing set out what the investors need before they make the investment. The most important condition is completion of due diligence. Due diligence is the process in which the investors will look into the company's business more thoroughly to see if the investment makes sense, whether the company's accounting checks out, and whether the company is complying with its existing agreements and legal requirements. Two important forms of due diligence that can cause heartburn for founders are business and technical (or technology) due diligence.

Investors will often do business diligence before giving you a term sheet. Business diligence is basically the investors looking into the company's commercial prospects and deciding if they think the company is going to be successful.

Technical diligence, which is typically used with technology companies - e.g., software, web and mobile apps - checks out the company's product to see whether it functions properly, has any major bugs, and can scale, and verifies whether the team is competent to handle further development.

If the investors aren't satisfied with due diligence, this gives them a credible reason to back out of the deal. Even if you have a term sheet, the deal isn't over until the money's in the bank.