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.
Chicago Illinois Angel Investment Term Sheet is a legal document outlining the conditions and terms of an investment made by an angel investor or a group of angel investors in a startup or early-stage company based in Chicago, Illinois. It serves as a roadmap for the investment process and establishes the rights and obligations of both parties involved. The Chicago Illinois Angel Investment Term Sheet typically includes the following key elements: 1. Investment Details: This section outlines the total amount of investment funds committed by the angel investor(s), the form of investment (equity or convertible debt), and the proposed investment timeline. 2. Valuation and Ownership: The term sheet specifies the pre-money valuation of the company and the percentage of ownership the investor will receive in exchange for their investment. This is often negotiated based on the company's potential, market conditions, and risk involved. 3. Investment Structure: It describes whether the investment will take the form of equity or debt. In equity investments, the term sheet outlines the class of shares issued and any specific rights attached to those shares. If it is a convertible debt, it specifies the terms of conversion, such as conversion price and conversion events. 4. Board Representation: If the angel investor wishes to have a say in the company's management, the term sheet may stipulate the right to appoint a representative to the company's board of directors. 5. Rights and Protections: The term sheet outlines various rights and protections for the investor, such as anti-dilution provisions, liquidation preferences, and tag-along and drag-along rights. These provisions safeguard the investor's interests and help mitigate risk. 6. Exit Strategy: It details the potential exit options for the investor, including the right to participate in future funding rounds, initial public offering (IPO), or acquisition. The term sheet may also address any limitations or conditions regarding the company's exit. Different types of Chicago Illinois Angel Investment Term Sheets may include variations based on the specific needs and preferences of investors and startups. Some notable types are: 1. Seed Funding Term Sheet: Specifically designed for early-stage startups seeking initial investment to develop their product or service. 2. Series A Term Sheet: Applicable to startups in their growth stage, focusing on securing funding for expanding operations, marketing, and scaling the business. 3. Bridge Financing Term Sheet: Suitable for companies in need of short-term funding to sustain their operations until they secure a significant funding round. 4. Convertible Note Term Sheet: Often used when investors prefer debt instruments that can convert into equity at a later stage, providing flexibility for both parties. In conclusion, the Chicago Illinois Angel Investment Term Sheet is a critical document that outlines the terms and conditions of angel investments made in startups or early-stage companies based in Chicago. These term sheets may vary depending on the specific investment stage and preferences of the parties involved.Chicago Illinois Angel Investment Term Sheet is a legal document outlining the conditions and terms of an investment made by an angel investor or a group of angel investors in a startup or early-stage company based in Chicago, Illinois. It serves as a roadmap for the investment process and establishes the rights and obligations of both parties involved. The Chicago Illinois Angel Investment Term Sheet typically includes the following key elements: 1. Investment Details: This section outlines the total amount of investment funds committed by the angel investor(s), the form of investment (equity or convertible debt), and the proposed investment timeline. 2. Valuation and Ownership: The term sheet specifies the pre-money valuation of the company and the percentage of ownership the investor will receive in exchange for their investment. This is often negotiated based on the company's potential, market conditions, and risk involved. 3. Investment Structure: It describes whether the investment will take the form of equity or debt. In equity investments, the term sheet outlines the class of shares issued and any specific rights attached to those shares. If it is a convertible debt, it specifies the terms of conversion, such as conversion price and conversion events. 4. Board Representation: If the angel investor wishes to have a say in the company's management, the term sheet may stipulate the right to appoint a representative to the company's board of directors. 5. Rights and Protections: The term sheet outlines various rights and protections for the investor, such as anti-dilution provisions, liquidation preferences, and tag-along and drag-along rights. These provisions safeguard the investor's interests and help mitigate risk. 6. Exit Strategy: It details the potential exit options for the investor, including the right to participate in future funding rounds, initial public offering (IPO), or acquisition. The term sheet may also address any limitations or conditions regarding the company's exit. Different types of Chicago Illinois Angel Investment Term Sheets may include variations based on the specific needs and preferences of investors and startups. Some notable types are: 1. Seed Funding Term Sheet: Specifically designed for early-stage startups seeking initial investment to develop their product or service. 2. Series A Term Sheet: Applicable to startups in their growth stage, focusing on securing funding for expanding operations, marketing, and scaling the business. 3. Bridge Financing Term Sheet: Suitable for companies in need of short-term funding to sustain their operations until they secure a significant funding round. 4. Convertible Note Term Sheet: Often used when investors prefer debt instruments that can convert into equity at a later stage, providing flexibility for both parties. In conclusion, the Chicago Illinois Angel Investment Term Sheet is a critical document that outlines the terms and conditions of angel investments made in startups or early-stage companies based in Chicago. These term sheets may vary depending on the specific investment stage and preferences of the parties involved.
