This term sheet for financing early stage companies with investments from sophisticated angel investors was
developed by Gust, the platform powering over 90% of the organized angel investment groups in the United States.
The goal was to standardize on a single investment structure, eliminate confusion and significantly reduce the costs of negotiating, documenting and closing an early stage seed investment.
For those familiar with early stage angel transactions, this middle-of-the-road approach is founder-friendly and investor-rational, intended to strike a balance between the Series A Model Documents developed by the National
Venture Capital Association that have traditionally been used by most American angel groups (which include a 17 page term sheet and 120 pages of supporting documentation covering many low-probability edge cases), and the one page Series Seed 2.0 Term Sheet developed in 2010 by Ted Wang of Fenwick & West as a contribution to the early stage community (which deferred most investor protections and deal specifics until future financing rounds.)
The Gust Series Seed Term Sheet does meet Section 2.2 of the Founder Friendly Standard. The term sheet providesfor "reverse vesting"so the company can repurchase unvested stock if a Founder leaves before four years.
District of Columbia Gust Series Seed Term Sheet
Category:
State:
Multi-State
Control #:
US-ENTREP-0039-1-A
Format:
Word;
Rich Text
Instant download
Description
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FAQ
In a Series Seed financing round, startups issue a new class of preferred stock to investors. The terms of this new class are typically set forth in an amended and restated certificate of incorporation, and are sold by means of a stock purchase agreement.
The first round of stock offered during the seed or early stage round by a portfolio company to the venture investor or fund. This stock is convertible into common stock in certain cases such as an IPO or the sale of the company.
Series CF Preferred Stock means a series of Preferred Stock that is subordinate in all respects to the Company Senior Preferred Stock. The per share liquidation preference of the Series CF Preferred Stock shall equal the Conversion Price.
Series Seed Preferred Stock is a type of preferred stock specifically designed for early-stage startups.
Similar to previous stages of financing, the series C round primarily relies on raising capital through the sale of preferred shares. The shares are likely to be convertible shares. They offer holders the right to exchange them for common stock in the company at some date in the future.
Series CF Preferred Stock means a series of Preferred Stock that is subordinate in all respects to the Company Senior Preferred Stock. The per share liquidation preference of the Series CF Preferred Stock shall equal the Conversion Price.