North Carolina Angel Fund Promissory Note Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• Control #: US-ENTREP-004-2
• 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 North Carolina Angel Fund Promissory Note Term Sheet is a legal document that outlines the terms and conditions associated with an investment agreement between an angel investor and an entrepreneur or startup seeking funding in the state of North Carolina. This term sheet acts as a precursor to the formal promissory note which includes specific details related to the investment agreement. The North Carolina Angel Fund Promissory Note Term Sheet serves as a critical tool for investors and entrepreneurs to establish a mutual understanding of the investment terms before proceeding with the formalities. By providing a concise summary of the investment conditions, it helps both parties navigate the negotiation process and serves as a reference point for further legal documentation. Key elements covered in the North Carolina Angel Fund Promissory Note Term Sheet typically include: 1. Principal Amount: The total amount of funding that the investor agrees to provide to the entrepreneur or startup. 2. Interest Rate: The rate at which interest will accrue on the principal amount until it is repaid. 3. Repayment Terms: Specifies the duration of the promissory note, such as a fixed term or on-demand repayment, and any specific repayment milestones or installments. 4. Conversion Terms: If applicable, outlines any provisions regarding the conversion of the promissory note into equity ownership in the company. 5. Default Terms: Defines the events or conditions that would be considered a default by the entrepreneur or startup, and the consequences of default, such as penalties or the right to accelerate the repayment. 6. Collateral: Describes any assets or property that may be pledged as collateral against the loan. 7. Warranties: Includes any representations and warranties made by the entrepreneur or startup regarding the company's financial status, legal compliance, and ownership. While the North Carolina Angel Fund Promissory Note Term Sheet is a general framework, there may be different types depending on the unique requirements of the parties involved. For example, there could be specific term sheets for convertible promissory notes that outline more detailed terms related to equity conversion. Furthermore, term sheets can vary depending on whether the investment is made through a specific angel investment fund or individual investors. Overall, the North Carolina Angel Fund Promissory Note Term Sheet is a crucial preliminary document that facilitates discussions and ensures both parties are aligned before moving forward with the investment. It clarifies the terms, conditions, and expectations associated with the investment, enabling a smoother transaction between angel investors and entrepreneurs or startups seeking funding in North Carolina.