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.
Guam Gust Series Seed Term Sheet
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Multi-State
Control #:
US-ENTREP-0039-1-A
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Word;
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FAQ
What Is a Term Sheet? A term sheet is a nonbinding agreement that shows the basic terms and conditions of an investment. The term sheet serves as a template and basis for more detailed, legally binding documents.
A term sheet is a preliminary, non-binding document outlining the proposed investment amount and other important details of a deal. When you're raising funds for your startup, a lead investor will use a term sheet to outline the key points of their offer to invest in your company. Term Sheets for Startups: Uses & Examples - Carta carta.com ? blog ? term-sheets carta.com ? blog ? term-sheets
You need a strong pitch because you likely won't have an actual product at this point. This pitch will let investors know precisely what they're investing in and include details about your product, business, target market, and financial predictions for the future of your business.
But no matter who the investor is, a term sheet will always contain six key components, including: A valuation. An estimate of what a company is worth as an investment opportunity. ... Securities being issued. ... Board rights. ... Investor protections. ... Dealing with shares. ... Miscellaneous provisions.
A typical term sheet has the following details: The proposed amount of funding and the duration of engagement. Rights of founders and other common shareholders. Rights of investors and restrictions. Proposed use of funds (how and where the money will be spent)
