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.
A South Carolina Angel Investment Term Sheet is a legal document that outlines the terms and conditions of an angel investor's investment in a startup or early-stage company based in South Carolina. It serves as a blueprint for the investment process, ensuring that both parties are on the same page regarding key aspects of the investment. The term sheet typically covers various crucial elements such as the investment amount, the percentage of equity the investor will receive in return, the valuation of the company, and the agreed-upon timeline for the investment. It also outlines any special rights or protections the investor may have, such as board representation or anti-dilution provisions. South Carolina Angel Investment Term Sheets can vary depending on the specific requirements of the parties involved. However, two common types include: 1. Convertible Note Term Sheet: This type of term sheet is often used when the valuation of the startup is challenging, and both the investor and the entrepreneur want to delay determining the valuation until a later stage. A convertible note is essentially a loan that converts into equity at a future milestone, typically triggered by a subsequent funding round or acquisition. 2. Equity Financing Term Sheet: This term sheet is used when the investor and the company agree to a specific valuation upfront. The investor typically receives equity in exchange for their investment, and the term sheet outlines the percentage of equity, the valuation, and any rights or preferences associated with the investment. Both types of term sheet aim to protect the rights and interests of both the investor and the company, ensuring a clear framework for the investment process. It is crucial for both parties to thoroughly review and negotiate the term sheet before proceeding with the investment to avoid any misunderstandings or conflicts in the future.
