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.
A Connecticut Angel Investment Term Sheet is a legal document that outlines the terms and conditions for an angel investor's investment in a startup or early-stage company based in Connecticut. It serves as a preliminary agreement between the investor and the company, defining the key aspects of the investment deal. The term sheet generally consists of several sections, covering various crucial elements. These may include the investment amount, valuation of the company, equity ownership percentage, and the type of securities being issued. The sheet also outlines the rights and preferences of the angel investor, such as voting rights, liquidation preferences, and anti-dilution provisions. Connecticut Angel Investment Term Sheets can vary based on the specific needs and expectations of both the investor and the company. Different types of term sheets can be categorized based on their focus on key aspects: 1. Investment Amount: Some term sheets may emphasize the specific amount of funding that the angel investor is providing. This section could detail whether the investment is a one-time contribution or if it will be provided in multiple installments based on predefined milestones. 2. Valuation: This segment of the term sheet determines the value of the company and subsequently the percentage of equity the angel investor will receive in return for their investment. Various valuation methods, such as the pre-Roman valuation and post-money valuation, may be employed to reach an agreement on the company's worth. 3. Securities: The term sheet will outline the type of securities being offered to the angel investor in exchange for their investment. Common options include equity shares, convertible notes, or preferred stock. Each type of security carries different rights and privileges, and the term sheet will define the specific terms associated with the chosen security. 4. Investor Rights: This section of the term sheet outlines the rights and privileges afforded to the angel investor. It may cover matters such as board representation, information rights, or veto rights, allowing the investor to have a voice in critical decisions regarding the company's operations and future. In conclusion, a Connecticut Angel Investment Term Sheet is a comprehensive legal document that specifies the terms and conditions for an angel investor's investment in a startup based in Connecticut. It typically includes sections related to the investment amount, valuation, securities, and investor rights. Various types of term sheets exist to cater to the unique requirements of different investment deals.
