skip to content
New Literacy Technology Consultants

Investor Term Sheet Template

/ 2 min read

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.