Investment Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• City: Houston
• 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 Houston Texas Angel Fund Promissory Note Term Sheet is a legally binding document that outlines the terms and conditions of a financial agreement between an investor (angel fund) and a borrower in Houston, Texas. This term sheet defines the specifics of the promissory note, which is a contract where the borrower promises to repay a certain amount of money to the angel fund. The Houston Texas Angel Fund Promissory Note Term Sheet typically includes several key elements. Firstly, it specifies the principal amount, which is the money borrowed by the borrower. Additionally, the term sheet outlines the interest rate applied to the borrowed amount, as well as the repayment schedule, including the frequency and duration of repayments. Furthermore, the term sheet may include details about any collateral or security pledged by the borrower to secure the loan. This collateral provides the angel fund with a security interest in case of default by the borrower. The inclusion of collateral protects the investor's investment and ensures the borrower's commitment to repaying the borrowed amount. Apart from these basic terms, there may be variations of the Houston Texas Angel Fund Promissory Note Term Sheet, depending on the specific requirements and preferences of the angel fund and the borrower. Some possible types of term sheets include: 1. Convertible Note Term Sheet: This type of term sheet allows the angel fund to convert the outstanding loan balance into equity in the borrower's company under certain conditions, such as a future financing round. 2. Secured Promissory Note Term Sheet: In this variation, the term sheet emphasizes the use of collateral or security to mitigate the risk of default and protect the investor's interests. 3. Unsecured Promissory Note Term Sheet: Unlike the previous type, this term sheet does not require collateral, making it a riskier investment for the angel fund. Thus, the interest rate might be higher to compensate for the increased risk. It is important for both the angel fund and the borrower to carefully review and negotiate the terms of the Houston Texas Angel Fund Promissory Note Term Sheet before signing. Consulting legal professionals who specialize in finance and business law is highly recommended ensuring compliance with local regulations and to protect the interests of both parties involved in the financial agreement.