Pennsylvania 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 Pennsylvania Angel Fund Promissory Note Term Sheet is a legal document that outlines the terms and conditions of a financial agreement between an investor, commonly known as an angel investor, and a startup or early-stage company based in the state of Pennsylvania. This agreement allows the investor to provide financial support to the company in exchange for certain rights and benefits. The term "promissory note" refers to a written promise made by the startup to repay the investment amount, along with any interest or other agreed-upon terms, within a specified timeframe. The term sheet lays out the key terms of this promissory note, offering important details that both parties must agree upon before proceeding with the investment process. The Pennsylvania Angel Fund Promissory Note Term Sheet typically includes the following information: 1. Investment Details: This section highlights the amount of investment being made by the angel investor, whether it is a one-time lump sum or multiple installments, and the currency in which the investment is made. 2. Conversion Rights: If applicable, this section defines the conditions under which the outstanding debt can convert into equity shares of the startup company, allowing the investor to become a stakeholder in the business. 3. Interest Rate and Repayment Schedule: The term sheet specifies the interest rate that will be applied to the investment amount and the agreed-upon repayment schedule, which includes the frequency of repayments and the overall duration of the promissory note. 4. Collateral or Security: In certain cases, the angel investor may require the startup to provide collateral or security for the investment. This section outlines the specifics of any collateralized assets, such as intellectual property, inventory, or equipment. 5. Default and Remedies: The term sheet includes provisions that describe the consequences of defaulting on the repayment obligations and the remedies available to the angel investor in such a scenario. It is important to note that there may be different types or variations of the Pennsylvania Angel Fund Promissory Note Term Sheet, depending on the specific investment requirements and preferences of the parties involved. For instance, some term sheets may incorporate additional clauses like anti-dilution provisions, governance rights, or milestone-based financing, while others may focus solely on the basic terms of the promissory note. Each variation serves as a blueprint for the investment agreement and should be tailored to suit the needs and priorities of both the investor and the startup.