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."
Maine Gust Series Seed Term Sheet is a document that outlines the terms and conditions for a seed investment made by Maine Gust. This term sheet serves as a guide for entrepreneurs and investors looking to collaborate on a startup venture. The Maine Gust Series Seed Term Sheet typically includes various key elements such as: 1. Investment Amount: Specifies the amount of capital that Maine Gust is willing to invest in the startup. This amount can vary depending on the specific circumstances and needs of the venture. 2. Valuation: Outlines how the startup's value will be determined for the purpose of the investment. Valuation can be based on various factors like revenues, market potential, intellectual property, or comparable company analysis. 3. Equity Percentage: Indicates the ownership percentage that Maine Gust will acquire in the startup in exchange for the investment. This percentage is typically negotiated based on the valuation and the potential growth prospects of the venture. 4. pre-Roman and Post-money Valuation: Defines the valuation of the startup before and after the investment. The pre-money valuation refers to the value of the startup before the investment, while the post-money valuation refers to the value after the investment is made. 5. Liquidation Preference: Specifies the priority in which investors will receive their capital in the event of a sale, merger, or liquidation. Maine Gust may negotiate for a specific liquidation preference to protect their investment. 6. Anti-dilution protection: Provides safeguards for investors to protect their ownership percentage from being significantly diluted in future financing rounds. 7. Board Seat: Maine Gust may negotiate the right to appoint a representative to the startup's board of directors. This can give them the ability to actively participate in the decision-making process of the company. 8. Vesting Schedule: Sets forth the schedule and conditions under which the founder's ownership in the startup becomes fully owned. Vesting is typically implemented to ensure the founder's commitment and alignment with the long-term goals of the startup. 9. Rights and Restrictions: Specifies any additional rights or restrictions that Maine Gust may request, such as information rights, voting rights, or non-competition clauses. Different variations of the Maine Gust Series Seed Term Sheet may exist depending on the specific investment goals and preferences of the parties involved. Some specific types may include: 1. Safe (Simple Agreement for Future Equity): A type of term sheet commonly used in seed funding rounds where the investment is structured as a loan with the possibility of converting into equity upon the occurrence of certain trigger events. 2. Convertible Note: Another common type of term sheet for seed investments, where the investment is structured as a debt instrument that can later be converted into equity when a specified event occurs, typically the next financing round. In conclusion, the Maine Gust Series Seed Term Sheet is a comprehensive document that outlines the terms, conditions, and expectations for a seed investment made by Maine Gust in a startup venture. It is a vital tool for both entrepreneurs and investors to establish a solid foundation for collaboration and future growth.
