No shop agreement, just what the words mean. You are not going to go shopping again for the same thing once you have decided or agreed to buy the product (VC funding), its a good faith thing that you and your investor strike a balance on.
Just like when you strike a deal with a realtor and decide that the realtor is going to do the house hunting for you, the VC’s have something called a “no shop agreement”.
This is not a legally binding clause, it ethically is followed. What it does it once you decide to choose your investor and go with them, you are telling them – before we finalize and close our deal legally, we the company people will not be chasing other investors behind your back. As I wrote earlier about “Term Sheet”, this no shop agreement takes to life just before or during the final stages of the term sheet.
