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 North Dakota Angel Investment Term Sheet is a legally binding document that outlines the terms and conditions of a potential investment in a startup or early-stage company by angel investors based in North Dakota. It serves as a framework for negotiations between the investors and the entrepreneurs, ensuring that both parties are on the same page regarding the investment and its related terms. The term sheet generally consists of several sections, each addressing important aspects of the investment agreement. These sections include: 1. Investment Details: This section contains information about the investment amount, the valuation of the company, and the ownership stake the investors will receive in exchange for their investment. 2. Liquidation Preference: This clause outlines the order in which investors will be repaid if the company is liquidated or undergoes an exit event, such as an acquisition or IPO. It may specify whether the investment will receive a preference over other stakeholders or if it will be treated equally. 3. Dividends or Distributions: This section describes the terms for periodic dividend payments or profit distributions that the investors may receive. 4. Governing Law and Jurisdiction: It clarifies the laws that will govern the agreement and the jurisdiction in which any disputes will be resolved. 5. Protective Provisions: These provisions grant certain rights to the investors, such as the ability to approve or veto certain strategic decisions or changes in the company's structure. 6. Anti-Dilution Protection: This clause ensures that if the company later issues new shares at a lower valuation, the existing investors' ownership stake is protected through adjustments to their share price or additional share issuance. 7. Board of Directors: If the investors are entitled to board representation, this section will outline their rights and responsibilities as directors. It is essential to note that the specific terms and language used in a North Dakota Angel Investment Term Sheet may vary based on the preferences and negotiation dynamics between the parties involved. Different term sheets may exist depending on the specific investment circumstances, such as the stage of the company, industry, or investment structure. However, the overall purpose of the term sheet remains consistent — to provide a framework for negotiations and establish the initial terms of the investment between angel investors and North Dakota-based entrepreneurs.
