North Dakota Angel Fund Promissory Note Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• Control #: US-ENTREP-004-1
• Format: Word; Rich Text

Description

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 Fund Promissory Note Term Sheet is a legal document that outlines the terms and conditions of an investment made by the North Dakota Angel Fund (DAF) to a startup or early-stage company. This term sheet serves as a preliminary agreement between the investor and the company, highlighting important details and setting the stage for the future investment agreement. The DAF is an investment fund established by the State of North Dakota to provide financial support and guidance to innovative businesses within the state. The fund seeks to foster economic growth, job creation, and technological advancements by investing in promising North Dakota-based companies. The North Dakota Angel Fund Promissory Note Term Sheet encompasses several key elements. These may include: 1. Investment Amount: This specifies the capital that the DAF is willing to provide to the company. It can be a fixed amount or a range depending on the company's needs and the DAF's evaluation. 2. Valuation and Equity: The term sheet outlines the valuation of the company and the corresponding equity stake the DAF will receive in exchange for its investment. This determines the percentage of ownership the DAF will have and any further implications on decision-making or other shareholder rights. 3. Interest Rate and Repayment Terms: The term sheet specifies the interest rate that will be charged on the investment, as well as the repayment terms. It outlines when repayment will begin, the duration of the loan, and any other relevant conditions related to repayment. 4. Conversion Options: Conversion options outline the circumstances under which the promissory note may convert into equity, typically upon the occurrence of certain events such as subsequent financing rounds or the company's acquisition. 5. Business Milestones and Use of Funds: The term sheet may define key business milestones or specific purposes for which the funds will be used. This ensures that the investment is tied to the company's development and progress, providing accountability and measuring success. It is important to note that there might be different types of North Dakota Angel Fund Promissory Note Term Sheets depending on various factors, such as the industry of the company, its stage of development, and the specific requirements of the DAF. These variations can result in term sheets tailored to businesses in sectors such as technology, agriculture, energy, or healthcare. In conclusion, the North Dakota Angel Fund Promissory Note Term Sheet is a foundational agreement that facilitates the investment process between the DAF and North Dakota-based startups or early-stage companies. It establishes the terms and conditions of the investment, including the investment amount, equity stake, interest rate, repayment terms, conversion options, and key milestones. By leveraging the support of the DAF, businesses can accelerate their growth and contribute to the economic prosperity of North Dakota.