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 Maryland Angel Investment Term Sheet is a legal document that outlines the terms and conditions of investment for angel investors in Maryland. Angel investors are individuals or groups of individuals who provide funding and support to startups and early-stage companies in exchange for equity ownership or profit participation. This term sheet serves as a framework for negotiations between the angel investor and the startup company, laying out the key terms that will govern the investment deal. It typically includes provisions related to the amount of investment, valuation of the company, ownership percentage, liquidation preference, voting rights, anti-dilution protection, board representation, and investor rights, among others. Different types of Maryland Angel Investment Term Sheets may exist, depending on the specific requirements and preferences of the investors and the startups. These may include: 1. Standard Term Sheet: This is the most common type of term sheet used in angel investments. It covers the essential terms and conditions that both parties need to agree upon. 2. Convertible Note Term Sheet: In some cases, rather than directly investing in equity, angel investors may choose to provide funds through a convertible note. This term sheet outlines the terms of the note, including interest rate, maturity date, valuation cap, and discount rate for conversion to equity in the future. 3. SAFE Term Sheet: SAFE stands for Simple Agreement for Future Equity, and it is an increasingly popular investment instrument in the startup ecosystem. This term sheet outlines the terms of the SAFE agreement, which typically includes a valuation cap or discount rate for future equity conversion. 4. Preferred Stock Term Sheet: Some angel investors may prefer to invest directly in preferred stock, which affords them certain preferential rights over common stockholders. This type of term sheet outlines the terms of the preferred stock investment, including liquidation preference, dividend rights, and conversion rights, among others. When negotiating the Maryland Angel Investment Term Sheet, it is essential for both parties to have legal representation to ensure their interests are protected. The term sheet serves as the basis for drafting the formal investment agreement, which will provide more detailed and binding provisions for the investment.
