This term sheet for financing early stage companies with investments from sophisticated angel investors was
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.
New York Gust Series Seed Term Sheet
Category:
State:
Multi-State
Control #:
US-ENTREP-0039-1-A
Format:
Word;
Rich Text
Instant download
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FAQ
A term sheet is a nonbinding agreement outlining the basic terms and conditions under which an investment will be made. Term sheets are most often associated with start-ups. Entrepreneurs find that this document is crucial to attracting investors, such as venture capitalists (VC) with capital to fund enterprises.
Series A funding comes after there is already a product and obvious traction. Seed funding is usually the first round of funding and raises a small amount of capital. In series A, the startup receives more capital to support future growth.
8 startup funding stages Pre-seed funding stage. This is the research phase of beginning a startup. ... Seed funding stage. At this point, your idea is an actual business with some customer traction. ... Series A funding. ... Series B funding. ... Series C funding. ... Series D funding and beyond. ... Mezzanine funding and bridge loans. ... IPO.
The first round after the seed stage is Series A funding. The term gets its name from the preferred stock sold to investors at this stage. In this round, it's important to have a plan for developing a business model that will generate long-term profit.
Series A is the next round of funding after the seed funding. By this point, a startup probably has a working product or service. And it likely has a few employees. Startups can raise an additional round of funding in return for preferred stock.
For U.S. startups with at least $1 million in seed funding, the median time between seed and Series A rounds this year has stretched to 25 months, compared with 21 months in 2022 and 14 months roughly a decade ago, market analytics firm Crunchbase estimates.