Custom-Made Term Sheet Template

This term sheet template is a non-binding document that provides the terms and conditions of an investment. It is usually the first step and sets the tone for legally binding documents once the parties reach an agreement on the details in the term sheet.

The term sheet essentially lays the groundwork for ensuring that the parties involved in a business transaction agree on the important aspects.

For example, if Startup A wanted to raise investment from C Ventures, they could sign a term sheet with the VC firm outlining the amount to be invested in the company, the percentage of shares to be issued to the investor, and the agreed valuation of the company before and after the investment (pre and post-money valuation). Subsequently, the parties could then sign a formal, binding agreement.

Preview Term Sheet Template

Why You Need This Term Sheet Template

This term sheet template is prepared for startups and has been carefully vetted by lawyers with qualifications in multiple jurisdictions, and extensive experience working in technology and with some of the fastest-growing companies in the tech space.

It is written in simple, comprehensive grammar that is easy to understand by founders and entrepreneurs. The legal terms in this template have been broken down and explained using words that can be read and understood by anyone.

Information You Need For This Template

To fill out this agreement to your needs, here is some information that will be asked of you in the form:

  • The legal name and address of the investor (holder of the term sheet)
  • Name, address, and business of the company
  • The investment amount, i.e., the amount being raised as an investment,
  • The core purpose or use of the investment funds
  • The share percentage of the company to be given to the investor
  • The projected post-money valuation of the company is the valuation of the company after the investment has been made.

This Term Sheet Template contains:

Business of the Company:

The term sheet clearly states the business of the company in which the investors are interested in investing.

Consideration:

The amount of money to be invested, the percentage of shares to be given to the investor, and the valuation at which the investment is made should be stated.

Use of Investment:

Term sheets usually provide a brief summary of the purpose for which the funds being invested will be applied.

 

Post-money Valuation:

This is simply the agreed-on or projected value of the company or the company’s worth after the investment has been made.

 

Terms and Conditions:

The term sheet is really a document of terms and conditions and will provide for conditions that should be met or fulfilled for the investment.

Pro-rata Rights:

This gives investors the chance to purchase more shares in the company at a future equity financing round with some discounts in order to secure their initial investment percentage in the company.

Drag Along/ Tag Along Clause:

This clause is included in instances where investors want a guarantee that minority stakeholders will be obliged to follow the guidance of majority stakeholders (drag along) or majority stakeholders will be obliged to include minority stakeholders in sale negotiations (tag along).

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