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.
Florida 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
Series A funding comes after there is already a product and obvious traction. Seed funding is usually the first round of funding and raises a small amount of capital. In series A, the startup receives more capital to support future growth.
These fundraising rounds allow investors to invest money into a growing company in exchange for equity/ownership. The initial investment?also known as seed funding?is followed by various rounds, known as Series A, B, and C. A new valuation is done at the time of each funding round.
Series Seed Preferred Stock is a type of preferred stock issued by startups during their early stage of development. Preferred stock is a hybrid security that combines elements of both debt and equity.
In series A, a startup is positioned to develop and refine its offer and processes. During series B, the cash is needed to be able to scale up and reach a much wider market. The fundamental business is already in place at series B, with the barrier to reaching a wider market being the need for investment.
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.