One of my mentors once said, VCs love to be the first to be second. They don’t want to be the first to issue a term sheet, but will issue one quickly once someone else has.

As a result, VCs often make their term sheets exploding offers – they expire within a defined timeframe. This enables them to reduce the odds that other VCs will be able to make competitive bids to invest in the startup before the entrepreneur has to make a decision.

If you like the VC you’re working with and the terms are fair, this isn’t an issue. However, this dynamic is something that you should be aware of, as you will need to be prepared to quickly review the terms of the term sheet.

The good news is that term sheets typically aren’t issued out of the blue – if you watch for the signs that you are close to receiving a term sheet, you can be prepared to respond to exploding offers.