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 Missouri Angel Investment Term Sheet refers to a legally binding document that outlines the key terms and conditions of an investment deal between angel investors and entrepreneurs/startups in the state of Missouri, United States. This term sheet is specifically designed to attract angel investors seeking high-potential opportunities for financial returns while supporting the growth of innovative businesses in Missouri. The term sheet typically includes various sections that cover crucial aspects of the investment agreement. These may include: 1. Investment Structure: This section clarifies the structure of the investment, specifying the type of securities being offered (e.g., equity, convertible debt) and the amount of funding being raised. 2. Valuation and Price per Share: The valuation sets the pre-money value of the company, which, along with the investment amount, determines the investor's ownership percentage. The price per share is the price at which the investor buys into the company. 3. Liquidation Preference: This provision ensures that angel investors are paid first in the event of a liquidation or sale of the company, protecting their investment. 4. Anti-Dilution Protection: It outlines whether the investor receives protection against dilution of their ownership percentage if the company issues additional shares in the future at a lower valuation. 5. Use of Funds: This section outlines how the raised capital will be utilized by the company, providing transparency to the investors regarding the intended purpose of their investment. 6. Board of Directors: It details the rights and responsibilities of the angel investor(s) on the company's board of directors. The number of seats granted to investors and any voting rights associated with their ownership stake are typically addressed. 7. Information Rights: This section defines the level of financial and operational information the company must provide to the angel investor(s) on a regular basis to keep them informed about the business's progress. 8. Exit Strategy: The term sheet may address the potential ways in which the angel investor(s) can exit their investment, such as through a sale of their shares or an initial public offering (IPO). It is important to note that there may be different types of Missouri Angel Investment Term Sheets, each catering to specific investment scenarios or preferences of the parties involved. These variants may include seed funding term sheets, convertible note term sheets, or equity financing term sheets, among others. The type of term sheet utilized largely depends on the investment structure and the preferences of the entrepreneur and angel investor(s) involved.
