developed by Gust, the platform powering over 90% of the organized angel investment groups in the United States.
The goal was to standardize on a single investment structure, eliminate confusion and significantly reduce the costs of negotiating, documenting and closing an early stage seed investment.
For those familiar with early stage angel transactions, this middle-of-the-road approach is founder-friendly and investor-rational, intended to strike a balance between the Series A Model Documents developed by the National
Venture Capital Association that have traditionally been used by most American angel groups (which include a 17 page term sheet and 120 pages of supporting documentation covering many low-probability edge cases), and the one page Series Seed 2.0 Term Sheet developed in 2010 by Ted Wang of Fenwick & West as a contribution to the early stage community (which deferred most investor protections and deal specifics until future financing rounds.)
The Gust Series Seed Term Sheet does meet Section 2.2 of the Founder Friendly Standard. The term sheet providesfor "reverse vesting"so the company can repurchase unvested stock if a Founder leaves before four years.
Annotated with detailed notes to help you understand each aspect of the Term Sheet."
The Georgia Gust Series Seed Term Sheet is a legal document used in venture capital financing to outline the terms and conditions of an investment in a startup or early-stage company. It serves as a preliminary agreement between the investor and the company, establishing the basic terms of the investment deal. This term sheet is particularly associated with the Georgia Gust series, an investment group known for its expertise in early-stage funding. The Georgia Gust Series Seed Term Sheet consists of various sections that address key aspects of the investment. These sections typically include: 1. Valuation: The term sheet specifies the pre-money valuation of the company, which determines the percentage of ownership the investor will receive in exchange for their investment. 2. Investment Amount: It outlines the total investment amount being offered by the investor. 3. Securities: The type of securities to be issued to the investor, such as convertible notes or preferred stock, is defined in this section. The terms of these securities, including any convertibility features or liquidation preferences, may also be outlined. 4. Board Representation: If the investor receives the right to appoint a representative to the company's board of directors, it will be detailed in this section. 5. Vesting and Founder Lock-up: The term sheet may outline vesting schedules, which determine when and how equity granted to founders and key employees will be earned over time. It may also include a founder lock-up provision, preventing founders from selling their shares for a specific period after the investment. 6. Anti-Dilution Protection: This mechanism protects the investor's ownership percentage in case the company raises additional funding at a lower valuation in the future. 7. Rights and Preferences: The term sheet may outline any special rights or preferences granted to the investor, such as participation rights in future financing rounds or pro rata rights to maintain their ownership percentage. 8. Closing Conditions: The conditions that must be satisfied before the investment becomes final are specified in this section, including due diligence, legal documentation, and regulatory approvals. Regarding different types of Georgia Gust Series Seed Term Sheets, there may be variations based on specific investment criteria, industry focus, or investment preferences of individual investors within the Georgia Gust series. These variations can include customized terms addressing particular risks or opportunities related to certain industries or investment stages. However, the core elements and objectives of the term sheet remain consistent across different variations.
