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.
The New Hampshire Gust Series Seed Term Sheet is a comprehensive legal document that outlines the terms and conditions for an investment in an early-stage startup company located in New Hampshire. It serves as a guide for both the startup and the investor, providing a framework for negotiating the terms of the investment. Key terms and provisions typically included in the New Hampshire Gust Series Seed Term Sheet are: 1. Investment Amount: The term sheet specifies the amount of funding the investor is willing to provide to the startup in exchange for equity. 2. Valuation: The pre-money valuation of the startup is determined, which helps in calculating the investor's ownership percentage after the investment. 3. Capitalization Table: This table outlines the ownership stakes of the existing shareholders and the proposed ownership stakes post-investment. 4. Liquidation Preference: The term sheet may include provisions that ensure the investor receives their investment back before other shareholders in case of liquidation or acquisition. 5. Dividend Preference: It specifies whether the investor is entitled to receive dividends on their investment before other shareholders. 6. Anti-dilution Protection: This clause protects the investor from dilution of their ownership stake in case the company raises additional funding at a lower valuation in the future. 7. Board of Directors: The term sheet sometimes outlines the composition of the company's board of directors, ensuring that the investor has a seat on the board or has certain observer rights. 8. Corporate Governance: It may define certain corporate governance rules to be followed by the startup, such as approval thresholds for major decisions and management reporting requirements. Different types or variations of the New Hampshire Gust Series Seed Term Sheet may exist based on the specific requirements of the investor or the startup. These variations may include different terms, customized rights, or specific provisions tailored to the nature of the startup or the investor's preferences. The specific names of these variations would typically reflect the investor's or the startup's name, such as "XYZ Ventures Series Seed Term Sheet" or "ABC Startup Gust Term Sheet."
