- A term sheet is a document that describes the key terms of the investment before you pay for a lawyer to prepare them for you.
- Term sheets allow you to invite potential investors to invest on the same terms (if agreed by the lead investor).
- Key points of a term sheet:
- Name of the investor
- Amount being invested
- Pre-money valuation
- The types of shares
- Provisions around founder lock-in and vesting
- Investor rights, including the right to appoint a Director (and the Director approval rights)
- Provisions around governance
- The rules around issuing and transferring shares
- It should also have a capitalisation table attached.
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