California Angel Fund Promissory Note Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• Control #: US-ENTREP-004-1
• Format: Word; Rich Text

Description

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. New start-up companies often turn to the private equity market for seed money because the formal equity market is reluctant to fund risky undertakings. In addition to their willingness to invest in a start-up, angel investors may bring other assets to the partnership. They are often a source of encouragement; they may be mentors in how best to guide a new business through the start-up phase and they are often willing to do this while staying out of the day-to-day management of the business.
Term sheet is a non-binding agreement setting forth the basic terms and conditions under which an investment will be made.

The California Angel Fund Promissory Note Term Sheet is a legal document that outlines the terms and conditions of a loan provided by the California Angel Fund to a startup or early-stage company. This term sheet plays a crucial role in defining the repayment terms, interest rate, conversion rights, and other important details associated with the loan. The California Angel Fund Promissory Note Term Sheet typically includes the following key elements: 1. Loan Amount: This section specifies the amount of money that the startup or company will receive as a loan from the California Angel Fund. It is crucial to have a clear understanding of the exact loan amount to ensure transparency and avoid any confusion or disputes. 2. Interest Rate: The term sheet outlines the interest rate at which the loan will be provided. This rate is usually determined by considering various factors such as the company's risk profile, market conditions, and the terms set by the California Angel Fund. 3. Conversion Rights: In some cases, the California Angel Fund may have the option to convert the loan into equity shares of the recipient company. The term sheet will outline the conditions and terms for conversion, providing a clear understanding of the potential equity ownership for both parties. 4. Repayment Terms: This section elaborates on the repayment schedule and specific terms for the loan. It usually includes details such as the duration of the loan, whether there are any grace periods, and the frequency of payments (e.g., monthly, quarterly, etc.). The term sheet may also specify any potential penalties or late fees for missed or delayed payments. 5. Events of Default: The term sheet includes conditions that, if breached by the recipient company, would be considered an event of default. This section outlines the consequences of such a default, which may include accelerating the repayment schedule or other remedies available to the California Angel Fund. Different types of California Angel Fund Promissory Note Term Sheets may exist depending on the specific requirements and circumstances of the startup or company seeking funding. Variations may include term sheets tailored for specific industries or loan amounts, with different interest rates, conversion terms, and repayment schedules. It is crucial for both parties involved in the loan agreement to carefully review and negotiate the term sheet to ensure mutual understanding and agreement on the terms and conditions. Seeking legal advice during this process is highly recommended protecting the interests of both the California Angel Fund and the recipient company.