Michigan Angel Fund Promissory Note Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• Control #: US-ENTREP-004-1
• Format: Word; Rich Text

Description

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 Michigan Angel Fund Promissory Note Term Sheet is a crucial document that outlines the key terms and conditions of a promissory note issued by the Michigan Angel Fund (MAF). Promissory notes are financial instruments used by startups and early-stage companies to secure funding from investors. The term sheet serves as a preliminary agreement between the MAF and the borrower, indicating the basic structure and terms of the promissory note. It is designed to ensure that both parties have a clear understanding of the terms before proceeding with the formal documentation. The Michigan Angel Fund offers different types of promissory note term sheets, tailored to meet the diverse needs of entrepreneurs and investors. Some variations may include: 1. Convertible Promissory Note Term Sheet: This type of term sheet outlines a promissory note that can be converted into equity in the company at a later stage. It sets the conversion terms, such as the conversion price, conversion events, and the rights of the investors upon conversion. 2. Secured Promissory Note Term Sheet: This term sheet details a promissory note that is backed by collateral, which can be any asset of value owned by the borrower. It establishes the terms related to the security interest, collateral valuation, and the rights of the MAF in case of default. 3. Unsecured Promissory Note Term Sheet: This type of term sheet defines a promissory note that lacks collateral. It outlines the repayment terms, interest rates, and other provisions without involving any collateral or security interest. The Michigan Angel Fund Promissory Note Term Sheet generally covers important aspects such as the principal amount, interest rate, payment schedule, maturity date, default provisions, transferability restrictions, and any potential event of default or acceleration. Additionally, it may include provisions for prepayment penalties, conversion or warrant terms, and representations and warranties made by the borrower. These term sheets are structured in a way that balances the interests of both the MAF and the borrower, fostering transparency and clarity in their financial arrangement. Entrepreneurs seeking funding from the MAF should carefully review these term sheets and negotiate any terms that may be critical to their business objectives and financial projections.

The Michigan Angel Fund Promissory Note Term Sheet is a crucial document that outlines the key terms and conditions of a promissory note issued by the Michigan Angel Fund (MAF). Promissory notes are financial instruments used by startups and early-stage companies to secure funding from investors. The term sheet serves as a preliminary agreement between the MAF and the borrower, indicating the basic structure and terms of the promissory note. It is designed to ensure that both parties have a clear understanding of the terms before proceeding with the formal documentation. The Michigan Angel Fund offers different types of promissory note term sheets, tailored to meet the diverse needs of entrepreneurs and investors. Some variations may include: 1. Convertible Promissory Note Term Sheet: This type of term sheet outlines a promissory note that can be converted into equity in the company at a later stage. It sets the conversion terms, such as the conversion price, conversion events, and the rights of the investors upon conversion. 2. Secured Promissory Note Term Sheet: This term sheet details a promissory note that is backed by collateral, which can be any asset of value owned by the borrower. It establishes the terms related to the security interest, collateral valuation, and the rights of the MAF in case of default. 3. Unsecured Promissory Note Term Sheet: This type of term sheet defines a promissory note that lacks collateral. It outlines the repayment terms, interest rates, and other provisions without involving any collateral or security interest. The Michigan Angel Fund Promissory Note Term Sheet generally covers important aspects such as the principal amount, interest rate, payment schedule, maturity date, default provisions, transferability restrictions, and any potential event of default or acceleration. Additionally, it may include provisions for prepayment penalties, conversion or warrant terms, and representations and warranties made by the borrower. These term sheets are structured in a way that balances the interests of both the MAF and the borrower, fostering transparency and clarity in their financial arrangement. Entrepreneurs seeking funding from the MAF should carefully review these term sheets and negotiate any terms that may be critical to their business objectives and financial projections.