New York 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 New York Angel Fund Promissory Note Term Sheet is a crucial document used in investment transactions to outline the terms and conditions between angel investors and entrepreneurs seeking funding in New York. This agreement serves as a simplified summary of the key provisions and acts as a precursor to the formal promissory note. The term sheet provides an overview of the principal components that govern the relationship between investors and entrepreneurs. Here are some relevant keywords to consider when describing the New York Angel Fund Promissory Note Term Sheet: 1. Investment Structure: The term sheet identifies the investment structure, whether it is a convertible note, a simple loan, or any other preferred investment arrangement. 2. Principal Amount: It outlines the principal amount that the entrepreneur seeks to raise and the specific currency utilized in the funding agreement. 3. Interest Rate: The term sheet states the interest rate applicable to the loan or convertible note, which the entrepreneur will be required to repay over a specified time frame. 4. Maturity Date: This important clause defines the deadline by which the entrepreneur must repay the loan or convert it to equity. 5. Conversion Rights: If the promissory note is convertible, the term sheet will detail the terms of conversion, such as the conversion discount or valuation cap. 6. Valuation Cap: This provision sets a maximum valuation at which the convertible note can be converted into equity, protecting the angel investors from excessive dilution. 7. Conversion Discount: If applicable, the term sheet may stipulate a discount rate applied to the conversion price when converting the promissory note into equity. 8. Interest Payment: The term sheet specifies the frequency and method of the interest payment, ensuring transparency and alignment between investors and entrepreneurs. 9. Repayment Terms: This section determines how the principal and interest will be repaid, whether it is through scheduled payments or a lump sum repayment at maturity. 10. Covenants and Conditions: The term sheet may include certain covenants and conditions that the entrepreneur must fulfill, such as maintaining adequate insurance coverage, providing regular financial reports, or obtaining necessary consents. Different variations of New York Angel Fund Promissory Note Term Sheets may exist, tailored to specific circumstances, investor preferences, or industry-specific requirements. However, irrespective of the variations, these term sheets typically address the crucial terms and conditions mentioned above to protect the interests of both investors and entrepreneurs.