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 District of Columbia Angel Investment Term Sheet refers to a legal document used in angel investing within the District of Columbia (D.C.), outlining the terms and conditions of investment. This document serves as a guideline for negotiation and agreement between angel investors and entrepreneurs seeking funding for their startups or early-stage companies. The term sheet covers various key aspects of the investment agreement, including but not limited to the investment amount, ownership percentage, rights and privileges of the investor, and terms of the investment. It helps both parties align their expectations and protect their respective interests by addressing crucial points before the investing process commences. There may exist different types of District of Columbia Angel Investment Term Sheets, depending on the specific requirements and preferences of both investors and entrepreneurs. Some common types are: 1. Equity Investment Term Sheet: This type of term sheet typically involves the exchange of equity in the startup or company for investment. It outlines the percentage of ownership the investor will receive in return for their capital, as well as any possible conditions for vesting or future financing rounds. 2. Convertible Note Term Sheet: In cases where the valuation of the startup is uncertain, a convertible note term sheet may be utilized. This type of term sheet provides for an investment that initially functions as a loan, with the intention of converting the loan into equity at a later stage, typically during a future financing round or upon achieving specific milestones. 3. Safe (Simple Agreement for Future Equity) Term Sheet: The Safe term sheet is a relatively newer form of investment agreement used for angel investing. It operates similarly to convertible notes but differs in its documentation. It outlines the conditions for converting the investment into equity at a later stage, typically triggered by a future financing round or a liquidity event. 4. Syndicate Term Sheet: In scenarios where multiple angel investors collaborate to pool their resources and invest collectively in a startup or company, a syndicate term sheet is employed. This document addresses how the investment will be divided among the participating investors, along with any separate terms and conditions applicable to the syndicate as a whole. It is important to note that while there may be different types of District of Columbia Angel Investment Term Sheets, the specific terms and clauses can vary widely based on the unique circumstances of each investment opportunity. Therefore, it is crucial for both parties to carefully review and negotiate the terms to ensure their interests are adequately protected.
