Investor Term Sheet Template With Confidentiality Statement In Virginia

State:
Multi-State
Control #:
US-00016DR
Format:
Word; 
Rich Text
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Description

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. New start-up companies often turn to the private equity market for seed money because the formal equity market is reluctant to fund risky undertakings. In addition to their willingness to invest in a start-up, angel investors may bring other assets to the partnership. They are often a source of encouragement; they may be mentors in how best to guide a new business through the start-up phase and they are often willing to do this while staying out of the day-to-day management of the business.

Term sheet is a non-binding agreement setting forth the basic terms and conditions under which an investment will be made.

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FAQ

Who Prepares a Term Sheet? Depending on the financial instrument, different parties may be the one to prepare the term sheet. For seed round investments, investors often provide a term sheet when offering their private investment. For loans, lending institution will often provide a term sheet to prospective borrowers.

Although the term sheet itself is not typically legally binding, some term sheets contain certain legally binding provisions (for example, confidentiality or exclusivity).

How to Prepare a Term Sheet Identify the Purpose of the Term Sheet Agreements. Briefly Summarize the Terms and Conditions. List the Offering Terms. Include Dividends, Liquidation Preference, and Provisions. Identify the Participation Rights. Create a Board of Directors. End with the Voting Agreement and Other Matters.

Term sheets evidence serious intent but are generally not legally binding.

Exclusivity - This is a standard condition that requires that you don't talk to other investors for a specific period after you sign the term sheet and while the investor is doing their due diligence. But be sure the time period isn't too long - 30-45 days is about right.

A "bad" term sheet could leave an entrepreneur without control of their company at the earliest stages of starting up, forcing them into losing major chunks of their equity, and even blowing up future deals with new investors.

“Term sheets”, “letters of intent”, “memoranda of understanding” and “agreements in principle” may constitute an enforceable agreement if the writing includes all the essential terms of an agreement. This is so even if “the parties intended to negotiate a 'fuller agreement'”.

The term 'confidentiality' means preserving authorized restrictions on access and disclosure, including means for protecting personal privacy and proprietary information.

Term sheets evidence serious intent, but generally are not legally binding.

CohnReznick's Beth Mullen looks at several important points in a deal term sheet. Credit delivery amount and timing. Guarantees. Reserves. Year 15 exit options. Implied costs for third-party reports.

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Investor Term Sheet Template With Confidentiality Statement In Virginia