Term Sheet

Valuation

There is a pre-money valuation that happens before making the investment. Then, there is post-money valuation after investment is made.

Amount of Investment

The amount of money that the investor puts in the company.

Security types

Defines the types of securities issued like common stock, preferred stock, or convertible notes.

Percentage of ownership

The percentage of company that the investor owns after the investment.

Board composition

Details about the structure of the company’s board of directors that includes the details of how many seats the investor will hold.

Liquidation Preference

Defines the order in which the investors get paid in the event of liquidation or sale of the company. This often includes a multiple of the original investment.

Anti-Dilution Provision

Protections for investors to prevent the dilution of their ownership percentage in future financing rounds.

Right to vote

Defines the voting rights of the new shares compared to the older ones.

Dividend

Details on whether the chosen shares will have dividends. If it is so, how will they be calculated and shared within the investors.

Vesting Schedule

Terms to vest the equity of founders and employees to ensure that they remain connected with the company for a long time.

Right to refuse and co-sale

It gives the right to investors to purchase shares before they are put up for sales to outside party.

Right to conversion

Details on how and when the preferred shares can be converted into common shares.

Preceding conditions

Any conditions to be met before the investment proceeds.

Clarity and Agreement

Guiding Documentation

Negotiation Framework

Investor Protection