Tennessee 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 Tennessee Angel Fund Promissory Note Term Sheet serves as a comprehensive document outlining the terms and conditions associated with the financing agreement between the Tennessee Angel Fund and a startup company seeking investment. This crucial legal document establishes a framework that governs various aspects of the funding process, including the repayment terms, interest rates, and ownership rights. The Tennessee Angel Fund offers a variety of Promissory Note Term Sheets tailored to meet the unique needs of different startups. Some key types include: 1. Convertible Promissory Note Term Sheet: This type of term sheet outlines the terms under which the loan can be converted into equity in the event of a future fundraising round or upon the occurrence of specific trigger events. 2. Secured Promissory Note Term Sheet: This Term Sheet provides details on loans that are secured against specific assets owned by the startup. This type of agreement ensures that in the case of default, the Tennessee Angel Fund can claim possession of the specified collateral. 3. Unsecured Promissory Note Term Sheet: Unlike the secured version, this term sheet does not require any collateral from the startup. The loan is based solely on the startup's creditworthiness and ability to repay the funds. 4. Interest-Only Promissory Note Term Sheet: This term sheet outlines an agreement where the startup is only required to pay interest payments during the loan term, with the principal repayments due at the maturity date. 5. Amortizing Promissory Note Term Sheet: This Term Sheet outlines an agreement where the startup makes regular payments comprising both principal and interest over a specific period, resulting in the complete repayment of the loan by the end of the term. In conclusion, the Tennessee Angel Fund Promissory Note Term Sheet serves as a crucial contract governing the financial relationship between the Tennessee Angel Fund and a startup seeking investment. By specifying the terms and conditions, different types of term sheets cater to the varying requirements and circumstances of startups, ensuring transparency and clarity throughout the funding process.