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 Guam Angel Investment Term Sheet is a legally binding document used during an angel investment round in Guam, which outlines the basic terms and conditions of the investment agreement between the angel investor(s) and the startup or entrepreneur seeking funding. This term sheet represents an important step towards formalizing and finalizing the investment deal. The Guam Angel Investment Term Sheet typically contains several key sections that include vital details and provisions. These sections may include: 1. Investment Amount: This section specifies the amount of money that the angel investor(s) are willing to invest in the startup or business. 2. Valuation: The valuation section establishes the pre-money valuation of the company or startup, determining the percentage of ownership being offered to the angel investor(s) in exchange for their investment. This section also includes details about the post-money valuation and any anti-dilution rights. 3. Convertible Note or Equity: The term sheet may outline whether the investment will take the form of a convertible note or equity. A convertible note is a debt instrument that converts into equity at a predetermined milestone or event, whereas equity represents a direct ownership stake. 4. Liquidation Preference: This section determines how much priority an investor has in receiving their investment amount back in the event of a liquidation or acquisition of the company. It may include preferences such as participating or non-participating, and multiple or single. 5. Board Representation: Some term sheets may grant the angel investor(s) the right to hold a seat on the startup's board of directors or observe board meetings. 6. Voting Rights: This section specifies the rights and extent of the angel investor(s) in voting matters, including important decisions such as corporate restructuring, issuing additional shares, or selling the company. 7. Anti-dilution: An anti-dilution provision ensures that the angel investor(s) are protected from future funding rounds that may result in a decrease in their ownership percentage. 8. Vesting Schedule: In the case of equity investment, the term sheet may include a vesting schedule that stipulates the timeframe over which the angel investor(s) will earn their ownership percentage. This incentivizes long-term commitment and aligns the interests of the investor(s) and the startup. It is important to note that there may be variations of the Guam Angel Investment Term Sheet, depending on the specific requirements or preferences of the investor(s) and the startup. These variations could include customized clauses or additional terms to address specific concerns or risks related to the investment. Overall, the Guam Angel Investment Term Sheet serves as a preliminary agreement before the drafting of the final legal documents and helps both parties understand and agree upon the fundamental terms of the investment.
