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.
Puerto Rico Angel Investment Term Sheet refers to a legal document outlining the terms and conditions of an investment made by angel investors into startups or small businesses based in Puerto Rico. It serves as a preliminary agreement between the angel investors and the entrepreneurs, laying the foundation for further negotiations and the ultimate investment transaction. The term sheet consists of several key sections that clearly define the terms, expectations, and rights of both parties involved. These sections typically include the investment amount, equity stake, valuation, funding timeline, and investor rights. Additionally, it may also cover provisions for anti-dilution protection, board representation, conversion rights, liquidation preferences, and exit strategies. There are different types of Puerto Rico Angel Investment Term Sheets, depending on the specific requirements and objectives of the involved parties. Here are some common types: 1. Standard Term Sheet: This is the most basic type of term sheet, covering essential aspects like investment amount, equity percentage, and investor rights. It serves as a starting point for discussions and negotiations. 2. Convertible Note Term Sheet: In cases where the angel investors wish to provide a loan instead of directly buying equity, a convertible note term sheet is used. This type outlines the terms of the loan, including interest rate, maturity date, and conversion terms. 3. SAFE (Simple Agreement for Future Equity) Term Sheet: SAFE term sheets are utilized when investors and startups want to delay the determination of equity until a future equity financing round. It establishes the terms for the SAFE investment, which converts into equity according to pre-agreed conditions such as valuation caps and discount rates. 4. Participating Preferred Term Sheet: When angel investors seek additional protective rights and preferential treatment, a participating preferred term sheet is employed. This type includes provisions for the investors to participate in the distribution of proceeds upon liquidation, even after receiving their initial investment amount. 5. Founder-Friendly Term Sheet: Some term sheets are designed to be more favorable towards founders and startup owners, promoting a balanced relationship between investors and entrepreneurs. These term sheets often include provisions such as founder vesting schedules, governance rights, and fair valuation methodologies. It is important for both parties involved to carefully review and negotiate the term sheet before proceeding with the investment process. Once agreed upon, the term sheet forms the basis for drafting the final investment documents, such as the shareholders' agreement and subscription agreement, ensuring a clear understanding and a smooth investment process in Puerto Rico.Puerto Rico Angel Investment Term Sheet refers to a legal document outlining the terms and conditions of an investment made by angel investors into startups or small businesses based in Puerto Rico. It serves as a preliminary agreement between the angel investors and the entrepreneurs, laying the foundation for further negotiations and the ultimate investment transaction. The term sheet consists of several key sections that clearly define the terms, expectations, and rights of both parties involved. These sections typically include the investment amount, equity stake, valuation, funding timeline, and investor rights. Additionally, it may also cover provisions for anti-dilution protection, board representation, conversion rights, liquidation preferences, and exit strategies. There are different types of Puerto Rico Angel Investment Term Sheets, depending on the specific requirements and objectives of the involved parties. Here are some common types: 1. Standard Term Sheet: This is the most basic type of term sheet, covering essential aspects like investment amount, equity percentage, and investor rights. It serves as a starting point for discussions and negotiations. 2. Convertible Note Term Sheet: In cases where the angel investors wish to provide a loan instead of directly buying equity, a convertible note term sheet is used. This type outlines the terms of the loan, including interest rate, maturity date, and conversion terms. 3. SAFE (Simple Agreement for Future Equity) Term Sheet: SAFE term sheets are utilized when investors and startups want to delay the determination of equity until a future equity financing round. It establishes the terms for the SAFE investment, which converts into equity according to pre-agreed conditions such as valuation caps and discount rates. 4. Participating Preferred Term Sheet: When angel investors seek additional protective rights and preferential treatment, a participating preferred term sheet is employed. This type includes provisions for the investors to participate in the distribution of proceeds upon liquidation, even after receiving their initial investment amount. 5. Founder-Friendly Term Sheet: Some term sheets are designed to be more favorable towards founders and startup owners, promoting a balanced relationship between investors and entrepreneurs. These term sheets often include provisions such as founder vesting schedules, governance rights, and fair valuation methodologies. It is important for both parties involved to carefully review and negotiate the term sheet before proceeding with the investment process. Once agreed upon, the term sheet forms the basis for drafting the final investment documents, such as the shareholders' agreement and subscription agreement, ensuring a clear understanding and a smooth investment process in Puerto Rico.
