1. Investment Amount
- Amount: [$X,000,000]
- Valuation: [$X,000,000 pre-money / post-money]
2. Equity Stake
- Equity Percentage: [X%]
3. Type of Security
- Security Type: [Preferred Stock / Common Stock / Convertible Notes / SAFE, etc.]
4. Dividend Rights
- Dividend Rate: [X% per year, non-cumulative or cumulative]
- Dividend Conditions: [Paid if declared by the Board of Directors, paid when profitable, etc.]
5. Voting Rights
- Voting Rights: [X votes per share, or one vote per share]
- Special Voting Rights: [Any specific votes reserved for investors, such as changes to the Board or major company decisions.]
6. Liquidation Preference
- Preference: [Xx liquidation preference (e.g., 1x, 2x)]
- Participation Rights: [Non-participating or participating (how much the investor receives in case of liquidation)]
7. Exit Strategy
- Exit Plan: [Planned IPO within X years, acquisition by Company Y within X years, etc.]
- Investor Rights: [Investors have the right to initiate a secondary sale after X years.]
8. Use of Funds
- Capital Allocation:
- Product Development: [X%]
- Marketing: [X%]
- Hiring: [X%]
- Operational Expenses: [X%]
- Others: [X%]
9. Board Seats
- Board Representation: [Investor will receive one board seat, or a representative on the advisory board.]
10. Anti-Dilution Protection
- Type of Anti-Dilution: [Full ratchet or weighted average]
- Details: [Protection applies in the event of future financing rounds at a lower valuation.]
11. Rights of First Refusal & Co-Sale Rights
- Right of First Refusal: [Investors have the right to purchase additional shares before third parties.]
- Co-Sale Rights: [Investors may sell their shares alongside the founders if they sell their stake.]
Visuals
- Summary Table: Provide a clear table summarizing the key terms for easy reference.
- Scenario Analysis Chart: A chart showing the potential impact of different investment scenarios (e.g., exits, dilution).
Notes
- Consult a Legal Professional: Term sheets are legally binding, so work with legal advisors to ensure the terms align with your objectives and comply with local laws.
- Be Prepared for Negotiations: Investors may want to alter some of the terms, so be ready to negotiate certain points, such as valuation or equity stake.