What is an exploding offer?
An exploding offer is an investment term sheet — or, more rarely, an employment or acquisition offer — that automatically expires within a short, often unreasonably brief, window (24 hours to a few days) if not accepted. Exploding offers are used to pressure the founder or employee into accepting before they can pursue competing terms.
While exploding offers are not inherently unlawful, they raise red flags about the offeror’s negotiating style. Sophisticated counsel typically requests an extension; if refused, the offeree should evaluate whether the time pressure reflects justifiable urgency or coercive tactics.