This document is a checklist for a venture capital term sheet. It addresses each component of a venture capital term sheet and discusses the requirements of each. Among the topics covered are: type of securities to be issued, dividends and distributions, liquidation preference, conversion features, and redemption features.
New Hampshire Venture Capital Term Sheet Guidelines Checklist: A Comprehensive Overview Keywords: New Hampshire, Venture Capital, Term Sheet, Guidelines, Checklist Description: New Hampshire Venture Capital Term Sheet Guidelines Checklist is a helpful resource for entrepreneurs and startups seeking funding from venture capital firms in the state of New Hampshire. This checklist aims to provide a detailed overview of the key components that businesses should consider and include in their term sheet when negotiating a venture capital investment deal. 1. Term Sheet Basics: — Introduction: Explaining the purpose and significance of a term sheet. — Parties Involved: Identifying the participating entities, including the venture capital firm, startup, and any co-investors. — Date and Version: Documenting the date of issuance and any subsequent revisions. 2. Deal Structure: — Investment Amount: Specifying the total investment being sought from the venture capital firm. — Valuation: Determining the pre-money valuation of the startup and the percentage of ownership the investor will hold after the investment. — Capitalization Table: Outlining the ownership percentages of existing shareholders and the proposed distribution after the investment. 3. Securities and Equity: — Preferred Stock: Describing the terms and rights associated with the preferred stock being issued to the investor. — Conversion Rights: Explaining the conditions and conversion ratio for converting preferred stock into common stock. — Liquidation Preferences: Clarifying the order of priority for distribution of funds in case of a liquidation event. 4. Governance and Control: — Board Representation: Specifying the number of board seats the investor will hold and any veto rights or observer rights granted. — Protective Provisions: Listing any significant decisions that require investor consent, ensuring their influence in key matters. — Information Rights: Defining the frequency and type of financial and operational reporting the startup must provide to the investor. 5. Rights and Obligations: — Anti-Dilution: Detailing the mechanisms for protecting investors in case of future down-rounds or dilution events. — Right of First Refusal: Outlining the investor's option to purchase additional shares before other parties in future funding rounds. — Lock-up Period: Determining any restrictions on the sale or transfer of shares held by existing shareholders. Types of New Hampshire Venture Capital Term Sheet Guidelines Checklist: 1. Early-stage Checklist: — Designed for startups and entrepreneurs seeking initial funding rounds. — Focuses on essential elements of the term sheet and investment structure. 2. Growth-stage Checklist: — Aimed at companies with a proven track record and revenue generation. — Includes additional provisions for scaling the business and accommodating future financing rounds. In conclusion, the New Hampshire Venture Capital Term Sheet Guidelines Checklist serves as a valuable tool for entrepreneurs navigating the venture capital investment landscape in New Hampshire. By following this checklist, startups can ensure they cover all critical aspects of their term sheet, paving the way for successful fundraising and establishing productive partnerships with venture capital firms.
