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.
A Montana Angel Investment Term Sheet is a legally binding document that outlines the terms and conditions of an investment between angel investors and startup companies located in the state of Montana. This document serves as a basis for negotiation and provides a general framework for the investment deal. It is designed to protect the interests of both parties involved in the funding process. The Montana Angel Investment Term Sheet covers various aspects of the investment agreement, including the amount of funding to be provided by the angel investor, the valuation of the startup company, the ownership percentage the investor will receive, and the rights and obligations of both parties. It typically consists of the following sections: 1. Investment Details: This section includes the total investment amount agreed upon, the number of shares or equity percentage the investor will receive, and the pre-money valuation of the startup. 2. Investor Rights: It outlines the specific rights the investor will have, such as board representation, information rights, anti-dilution protection, preemptive rights, and voting rights. 3. Management and Control: This section defines the decision-making process, including provisions related to the board of directors, management team, and major business decisions. 4. Exit Strategy: This part outlines the potential exit options for the investor, such as an initial public offering (IPO) or acquisition, and any predefined terms related to the sale of the company. 5. Intellectual Property: It covers the ownership and protection of any intellectual property developed by the startup, ensuring that the investor's interests are safeguarded. 6. Founder Vesting: This section includes provisions related to the vesting of founders' shares, ensuring that they are not able to walk away from the company immediately after receiving the investment. 7. Anti-dilution Protection: It provides protection for the investor against future dilution of their ownership stake in case the company issues additional shares at a lower price. 8. Representations and Warranties: This part includes statements and assurances made by both parties regarding their capacity to enter into the investment agreement. 9. Governing Law: It specifies the laws and jurisdiction under which any disputes arising from the investment agreement will be resolved. It is important to note that while there may not be different types of Montana Angel Investment Term Sheets, the specific terms and conditions within each sheet can vary depending on the negotiation and unique circumstances of the investment deal.
