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.
Annotated with detailed notes to help you understand each aspect of the Term Sheet."
Montana Gust Series Seed Term Sheet is a legal document that outlines the terms and conditions for investments in early-stage startups. It acts as a framework for negotiations between startups and potential investors, providing a structure for discussions regarding ownership, rights, and duties. This term sheet is specifically designed for startups located in Montana, United States, and follows the guidelines set by the Gust Series Seed Term Sheet, which is a widely recognized and accepted industry standard. The Montana Gust Series Seed Term Sheet covers various key areas including financing terms, valuation, investor rights, and company governance. It includes essential provisions such as the pre-money valuation, the total amount of funding to be raised, and the ownership stake investors will receive in exchange for their investment. Key terms covered in the Montana Gust Series Seed Term Sheet: 1. pre-Roman valuation: This term sheet specifies the valuation of the startup before any investment is made. It serves as a basis for determining the ownership stake investors will receive. 2. Investment amount: The total amount of funding to be raised is outlined in the term sheet. It details the investment round and specifies the contribution expected from each investor. 3. Ownership and dilution: The term sheet defines the ownership stake that investors will receive in exchange for their capital infusion. It also outlines the potential dilution of existing shareholders' ownership as the startup raises additional funding. 4. Liquidation preferences: This provision addresses the order in which proceeds from the sale or liquidation of the startup will be distributed among investors. It ensures that investors receive their initial investment back before other shareholders. 5. Dividends: The term sheet may include provisions regarding the payment of dividends to investors, which represent a share of the startup's profits distributed periodically. Other elements commonly addressed in Montana Gust Series Seed Term Sheets: a. Board composition: It defines the number and composition of the board of directors, including whether outside investors are entitled to board seats. b. Protective provisions: These provisions ensure that investors have certain rights to protect their investment and influence significant decisions, such as changes to the startup's capital structure or sale of the company. c. Anti-dilution protection: This provision safeguards investors from future down-rounds by adjusting their ownership percentage or price per share if subsequent funding rounds are priced lower. d. Conversion rights: It outlines the conditions under which investors have the option to convert their preferred shares into common shares, often triggered by an acquisition or IPO. e. Founder restrictions: It may include non-compete, non-solicitation, or voting restrictions to protect the startup from founders leaving or taking key employees or clients with them. Different variations or types of Montana Gust Series Seed Term Sheets may exist depending on specific startup needs or investor requirements. These could include variations in valuation methodologies, liquidation preferences, or specific investor rights. However, the fundamental goal remains the same: to provide a framework for the negotiation and execution of early-stage startup investments in Montana.
