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."
The New Mexico Gust Series Seed Term Sheet is a comprehensive document outlining the key terms and conditions specific to investment opportunities in the state of New Mexico. This term sheet acts as a guide for angel investors, venture capitalists, and startups interested in funding and establishing a presence in the New Mexico startup ecosystem. The New Mexico Gust Series Seed Term Sheet provides a framework for negotiations between investors and startups, ensuring a fair and standardized agreement for both parties involved. It includes various clauses and provisions that outline the terms of investment, ownership, and governance of the startup. Key elements of the New Mexico Gust Series Seed Term Sheet include: 1. Valuation and Investment: This section specifies the pre-money valuation of the startup and the amount of investment that the investor is willing to commit. It outlines whether the investment will be made as a convertible note or through equity. 2. Conversion and Dilution: The term sheet states the terms for potential conversion of convertible notes into equity and any subsequent dilution that may occur during future funding rounds. 3. Liquidation Preferences: It defines the order of priority for the distribution of proceeds in case of a liquidation event. This may include preferences for investors to receive a certain multiple of their investment before the founders and other stockholders. 4. Board of Directors: This section outlines the composition and responsibilities of the board of directors. It states the number of board seats that the investor is entitled to and whether any special voting rights are granted. 5. Voting Rights: The term sheet specifies the voting rights attached to each class of preferred stock and any protection mechanisms put in place to safeguard the investor's interests. 6. Anti-Dilution Protection: This provision protects investors from the dilution of their ownership stake in case of down-priced subsequent equity rounds. 7. Employee Stock Option Pool: It defines the size and allocation of an employee stock option pool to ensure that there are sufficient equity incentives for future employees. 8. Restrictive Covenants: This section may include non-compete and non-solicitation clauses to protect the investor's investments and trade secrets. Types of New Mexico Gust Series Seed Term Sheets: 1. Early-Stage Term Sheet: This term sheet is tailored for startups in their early stages, typically at the seed funding stage. It focuses on providing capital to prove the viability of the startup's concept. 2. Growth-Stage Term Sheet: This term sheet is designed for established startups that have already received seed funding and are looking for additional investment to scale their operations. This term sheet may include more advanced financial terms and provisions. In summary, the New Mexico Gust Series Seed Term Sheet provides a comprehensive framework for investment negotiations in the state of New Mexico. It outlines the key terms and conditions essential for both investors and startups to establish a fair and mutually beneficial relationship.
