Oklahoma Angel Investment Term Sheet

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Multi-State
Control #:
US-00016DR
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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.

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FAQ

A: Angel investors typically want to receive 20% to 25% of your profit. However, how much you pay your angel investors depends on your initial contract. Hammer out these details before they give you any money, and have a lawyer draw up a contract, which will make your angel investors feel safer in their investment.

Advantages of angel investorsAngel investors are typically experienced investors who take a long-term view and understand that they may not see a return on their investment for a long period of time. Many angel investors are also looking for personal opportunities in addition to investment opportunities.

What do angel investors want in return? Angel investors typically want ownership in the company they invest in. An angel investor usually provides capital in exchange for equity (stock in the company) or convertible debt, which is a loan that can be converted to equity at a later date.

Common Angel Investment TermsSeed Capital (Stage) Just like it sounds, seed capital is the initial capital that funds a business.Valuation. The startup valuation of your company represents how much someone other than you thinks it's worth.Term Sheet.Convertible Note.Dilution.Cap Table.Common & Preferred Stock.Vesting.More items...?

Angel investing groups generally aim to take 20 to 50 percent ownership stake of early-stage companies. Therefore, structuring the deal and negotiating the terms begin with the valuation of the company.

Angel investors usually take between 20 and 50 percent stake in the companies they help. Sometimes the exact amount is determined strictly by negotiation. However, frequently angel investors use a company's valuation as a measure for how much ownership they should take.

The Advantages of Angel Investors Having an angel investor means your business doesn't have to repay the funds because you're giving ownership shares in exchange for money. Angel investing is usually reserved for established businesses beyond the startup phase.

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Oklahoma Angel Investment Term Sheet