Term sheets may include some provision for dividends to be "paid" to the investor.  These dividends are commonly structured in one of three ways:  when declared, cumulative and compound.

When Declared
In this structure investors only get dividends when the board declares a dividend for the firm.  The legal language will often ensure that a dividend cannot be paid to another share class without also paying the same dividend to the preferred shareholders (investors).  To be clear, if the board doesn't declare a dividend, then one isn't paid.  If the board does declares a dividend, the investors get to participate.

Cumulative
Another common structure is for the investor to require that an annual dividend be paid to them.  Usually the dividend amount is a percentage of their initial investment. 

Most early-stage companies do not have excess cash to pay dividends, however.  If they do generate excess cash they typically re-invest it into the company.  As a result, investors accumulate their dividends as liquidity preference, to be paid before common shareholders get to participate. 

Compounding
Compounding dividends are structured much like cumulative dividends.  They are paid based on a predetermined percentage and accumulate as liquidity preference.  Compounding dividends differ in that the annual dividend amount is not determined as a percentage of initial investment, it is determined as a percentage of the initial investment plus the total accrued dividends.  Investors are paid dividends on dividends.