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 Oregon Gust Series Seed Term Sheet is a comprehensive document that outlines the terms and conditions specifically designed for startups seeking seed funding in the state of Oregon. This term sheet serves as a roadmap for entrepreneurs and investors, establishing a foundation for the startup's financing round. The Oregon Gust Series Seed Term Sheet is unique to the region and caters to the requirements and regulations of Oregon's startup ecosystem. By adhering to this term sheet, both startups and investors can ensure a smooth and transparent funding process. Key elements included in the Oregon Gust Series Seed Term Sheet usually encompass the following: 1. Valuation: This section outlines the pre-money valuation of the startup, which serves as a basis for determining the equity stake the investors will receive in exchange for their investment. 2. Investment Amount: The term sheet specifies the amount of seed funding that the investors are willing to provide to the startup. This amount is crucial in determining the financial runway for the company's operations. 3. Liquidation Preference: This provision details the priority order in which investors would receive their investments back in the event of a liquidation or acquisition of the company. Various types of liquidation preferences may be included, such as non-participating or participating. 4. Anti-Dilution Protection: This clause helps protect investors from dilution in case the startup raises additional funds at a lower valuation. It can include provisions such as full ratchet, weighted average, or broad-based, depending on the circumstances. 5. Board of Directors: The term sheet stipulates the number of board seats the investors will be entitled to, ensuring their influence in key decision-making processes within the startup. 6. Founder Vesting: This section defines the vesting schedule for the founder's shares, ensuring that founders remain committed to the startup over a certain period. Vesting typically occurs over a four-year period with a one-year cliff. 7. Information Rights: Investors are granted specified rights to access certain financial and operational information about the startup. This enables investors to stay updated and monitor the progress of their investment. While the Oregon Gust Series Seed Term Sheet is generally applicable, it can have variations based on the specific needs and preferences of individual investors and startups. These variations may include different combinations or weights of terms, as well as custom provisions tailored to the unique circumstances of the investment.
