West Virginia Angel Fund Promissory Note Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• Control #: US-ENTREP-004-2
• 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 West Virginia Angel Fund Promissory Note Term Sheet is a crucial document used in angel investing. It outlines the terms and conditions for providing funding to entrepreneurs and startups by angel investors in West Virginia. This term sheet serves as a preliminary agreement that defines the basic structure of the investment and serves as a guide for future negotiations and the final investment agreement. The West Virginia Angel Fund Promissory Note Term Sheet covers various key elements, including investment amount, interest rate, duration, repayment terms, and other special conditions. It is important to note that different types of West Virginia Angel Fund Promissory Note Term Sheets may exist, catering to specific investment scenarios and requirements: 1. Early-Stage Startup Term Sheet: This type of term sheet applies to startups in their initial stages, typically with a high level of risk involved. The terms and conditions might involve a relatively lower investment amount, a higher interest rate, and more flexible repayment options. 2. Growth-Stage Startup Term Sheet: This term sheet pertains to startups that have already gained traction, showing substantial growth potential. The investment amount may be higher, and the interest rate could vary depending on the startup's growth trajectory. Repayment options might be more structured, potentially including equity conversion if agreed upon. 3. Convertible Note Term Sheet: This type of term sheet is used when the angel investor and startup agree to convert the debt into equity at a predetermined valuation during a future funding round. The terms and conditions of a convertible note term sheet typically involve interest rates, repayment options, conversion mechanisms, and valuation caps or discounts. 4. Preferred Equity Term Sheet: In cases where angel investors seek an ownership stake in the startup, a preferred equity term sheet may be used. Here, the investor will negotiate terms involving the percentage of ownership, liquidation preferences, anti-dilution provisions, voting rights, and other protective clauses. The West Virginia Angel Fund Promissory Note Term Sheet is a vital tool for both angel investors and entrepreneurs seeking funding. It outlines the terms, expectations, and protections for all parties involved, providing a solid foundation for a successful investment partnership. Before signing any term sheet, it is crucial for both parties to carefully review and negotiate the terms to ensure alignment with their respective goals and interests.