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 Texas Angel Investment Term Sheet is a legal document that outlines the terms and conditions of an angel investment in a startup or early-stage company based in Texas. It serves as a framework for negotiations between the angel investor and the entrepreneur, providing clarity and protection for both parties. This term sheet typically covers key aspects of the investment, including the investment amount, equity stake, valuation of the company, preferred stock rights, and board representation. It also specifies the terms for potential future financing rounds, liquidation preferences, anti-dilution protection, and rights of first refusal. There are different types of Texas Angel Investment Term Sheets that vary based on specific investment needs, goals, and risk tolerances. Here are a few examples: 1. Simple Agreement for Future Equity (SAFE) — This type of term sheet offers a relatively simple and fast investment process, with the investor receiving the right to obtain equity in the future financing round at predefined terms. 2. Convertible Note — This term sheet allows the investor to provide a loan to the company that can later convert into equity upon the occurrence of certain events, such as a subsequent financing round. 3. Preferred Stock — In this scenario, the investor receives preferred stock with certain rights and preferences, such as liquidation preference or the right to participate in future financing rounds. 4. Equity Purchase Agreement — This type of term sheet involves the direct purchase of equity from the company, with negotiated terms to protect the investor's interests. It's important for both the entrepreneur and investor to thoroughly review and negotiate the Texas Angel Investment Term Sheet to ensure all necessary elements are included. Seeking legal and financial advice is recommended to ensure compliance with relevant state laws and to protect the interests of both parties.
