Draft Term Sheet for Alliance of Angels
Draft Term Sheet for Alliance of Angels
This draft term sheet, by Dan Rosen, CEO Dan Rosen & Associates, is for use by Alliance of Angels members as a starting point in negotiating seed stage deals. The AoA lead investor is noted as in the document. Each party in such deals should seek appropriate legal counsel. Except for the section titled “Exclusivity,” this term sheet does not create a legally binding obligation on any person or entity.
Company name
Acme, Inc
Location
Type of Entity
Washington State C Corporation
Type of Equity
Comment [DR1]: Some prefer Delaware incorporation. Washington state and Delaware have parallel laws, but Delaware has greater case law and therefore better protection for company
Directors.
Series A Preferred Stock
Size of Offering
Minimum to close
$500,000
Closing
Comment [DR2]: At times, Angels are asked to buy either common stock or S-Corp stock. Common makes sense in a limited situation: where an experienced entrepreneur has put lots of their own money into a company and you trust (based on experience with that individual) that they will treat investors well. S Corps cannot give preferred shares and should be avoided.
$750,000
On (“the Closing Date”) or when minimum to close is committed
Comment [DR3]: Might also want to specify a latest close date for the round. If not met, it forces the company to come back to investors.
Valuation
Pre-money
$2,000,000
Post-money
$2,750,000
Price per share
$1.0256
Investors
Draft
Various members of the Alliance of Angels, who are Accredited
Investors acting on their own account, and/or other Accredited
Investors only (as defined in SEC Rule 501)
Dan Rosen & Associates
Page 1
Investor Incentives
Investors who invest by the Closing Date will receive the following incentive:
Discount or
Warrants
Stock Options
25% Warrant Coverage
The company will increase the authorized pool of
This draft term sheet, by Dan Rosen, CEO Dan Rosen & Associates, is for use by Alliance of Angels members as a starting point in negotiating seed stage deals. The AoA lead investor is noted as in the document. Each party in such deals should seek appropriate legal counsel. Except for the section titled “Exclusivity,” this term sheet does not create a legally binding obligation on any person or entity.
Company name
Acme, Inc
Location
Type of Entity
Washington State C Corporation
Type of Equity
Comment [DR1]: Some prefer Delaware incorporation. Washington state and Delaware have parallel laws, but Delaware has greater case law and therefore better protection for company
Directors.
Series A Preferred Stock
Size of Offering
Minimum to close
$500,000
Closing
Comment [DR2]: At times, Angels are asked to buy either common stock or S-Corp stock. Common makes sense in a limited situation: where an experienced entrepreneur has put lots of their own money into a company and you trust (based on experience with that individual) that they will treat investors well. S Corps cannot give preferred shares and should be avoided.
$750,000
On (“the Closing Date”) or when minimum to close is committed
Comment [DR3]: Might also want to specify a latest close date for the round. If not met, it forces the company to come back to investors.
Valuation
Pre-money
$2,000,000
Post-money
$2,750,000
Price per share
$1.0256
Investors
Draft
Various members of the Alliance of Angels, who are Accredited
Investors acting on their own account, and/or other Accredited
Investors only (as defined in SEC Rule 501)
Dan Rosen & Associates
Page 1
Investor Incentives
Investors who invest by the Closing Date will receive the following incentive:
Discount or
Warrants
Stock Options
25% Warrant Coverage
The company will increase the authorized pool of