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.
The Kansas Angel Investment Term Sheet refers to a legally-binding document that outlines the terms and conditions of an investment agreement between angel investors and startup companies located in the state of Kansas, United States. This term sheet serves as a framework that helps both parties navigate the investment process and agree on various aspects of the deal. It lays out the key provisions and terms that govern the investment, protecting the interests of both the angel investor and the startup seeking funding. There are different types of Kansas Angel Investment Term Sheets, each tailored to specific investment scenarios. These may include: 1. Equity Investment: This term sheet outlines the terms for the purchase of equity in the startup by the angel investor. It specifies the percentage of ownership the investor will receive in exchange for their investment and any rights or privileges associated with the ownership. 2. Convertible Debt Investment: This type of term sheet is used when the investment is structured as a loan that can convert into equity at a later stage. It includes details about the interest rate, conversion terms, maturity date, and other conditions that determine when and how the loan can be converted into equity. 3. Preferred Stock Investment: In this scenario, the investor purchases preferred stock, which comes with certain preferences and rights over common stockholders. The term sheet for preferred stock investment outlines the rights, preferences, and privileges that the investor will have as a preferred stockholder. 4. SAFE (Simple Agreement for Future Equity): A SAFE is an increasingly popular type of investment instrument that allows investors to acquire equity in a startup at a future date, typically during a subsequent funding round. The term sheet for a SAFE outlines the terms of the agreement, including the valuation cap, discount rate, and any additional provisions specific to the SAFE. Regardless of the specific type of term sheet, they generally include sections covering the investment amount, valuation of the startup, timeline for funding, use of proceeds, investor rights (voting, information, board representation), anti-dilution provisions, liquidation preferences, and any other relevant terms or conditions agreed upon by both parties. It is important for both the angel investor and the startup company to review and negotiate the term sheet before proceeding with the investment. Once the term sheet is agreed upon, it serves as a basis for drafting the final investment agreement and other related legal documents that formalize the investment.
