New Hampshire 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 New Hampshire Angel Fund Promissory Note Term Sheet is a legally binding document that outlines the terms and conditions under which an angel investor provides funding to a startup or early-stage company in the state of New Hampshire. This term sheet serves as a framework for the subsequent negotiations between the investor and the entrepreneur, covering various aspects of the investment agreement. The New Hampshire Angel Fund Promissory Note Term Sheet typically includes key provisions such as the principal amount of the investment, the interest rate, the repayment terms, and the maturity date. It also specifies the type of security or collateral that may be required, such as a personal guarantee or a specific asset of the company. Additionally, the term sheet may outline any participation rights the investor may have in future financing rounds or exit events. There are several types of New Hampshire Angel Fund Promissory Note Term Sheets, each tailored to meet different investment scenarios and objectives. These include: 1. Convertible Promissory Note: This type of term sheet allows the investor to convert the debt into equity at a later stage, usually upon the occurrence of predefined events such as a subsequent funding round or an acquisition. Conversion terms, including the conversion price and equity percentage, are typically outlined in this variant. 2. Standard Promissory Note: This straightforward term sheet establishes a loan agreement without conversion rights. The entrepreneur is obligated to repay the principal amount and any accrued interest within a specific timeframe, usually with regular installments or in a lump sum. 3. Secured Promissory Note: In this type of term sheet, the investor requires the borrower to provide specific assets as collateral to secure the loan. The collateral serves as protection for the investor in the event of default, ensuring the possibility of recovering their investment. 4. Participating Promissory Note: With this type of term sheet, the investor not only receives interest payments and repayment of the principal amount but also has the right to participate in the future financial success of the company. In case of an exit event, such as an acquisition or IPO, the investor is entitled to a share of the proceeds. It is crucial for both parties involved in an investment deal to carefully review and negotiate the terms outlined in the New Hampshire Angel Fund Promissory Note Term Sheet. Legal counsel is often engaged to ensure compliance with state laws and to protect the interests of all parties.