"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."
Kentucky Angel Fund Promissory Note Term Sheet
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A term sheet is usually a non-binding agreement outlining the basic terms and conditions of the investment. It serves as a template for the convertible note for both parties. Convertible Notes Overview - Penn Law School University of Pennsylvania Carey Law School ? convertible-note University of Pennsylvania Carey Law School ? convertible-note PDF
Convertible notes are promissory notes that serve an additional business purpose other than merely representing debt. Convertible notes include all of the terms of a vanilla promissory note, such as an interest rate and the pledge of underlying security (if applicable). What is a Convertible Promissory Note? - Nolo nolo.com ? legal-encyclopedia ? what-is-a-c... nolo.com ? legal-encyclopedia ? what-is-a-c...
A promissory note is a form of debt that companies and individuals sometimes use, like loans, to raise money. The issuer, through the notes, promises to return the buyer's funds (principal) and to make fixed interest payments to the buyer in exchange for borrowing the money.
The main disadvantages of convertible note offerings are equity dilution and near?term stock price impact and, if the stock price fails to appreciate above the conversion price, potential refinancing risk.
Startup Law ResourcesVenture Capital, Financing. A convertible note is a loan instrument, but upon the occurrence of an "Equity Financing" - such as raising money from venture capitalists - the note will convert into equity. Convertible Note Purchase Agreement - UpCounsel upcounsel.com ? convertible-note-purchase-... upcounsel.com ? convertible-note-purchase-...
A convertible note is a debt instrument often used by angel or seed investors looking to fund an early-stage startup that has not been valued explicitly. After more information becomes available to establish a reasonable value for the company, convertible note investors can convert the note into equity.
Advantages of convertible notes for capital raising: Flexibility: Convertible notes provide flexibility for both the investor and the startup. Investors can convert their debt to equity if the company meets certain conditions, and startups can avoid setting an initial valuation until later rounds of funding.