Investment Term Sheet Template

Company: [Company Name], a [State] [Entity Type]
Investor(s): [Investor Name(s)]
Date: [Date]

1. Offering

• Securities: [Preferred Stock/Safe/Convertible Note/Common Stock].
• Amount to be raised: $[Total Amount].
• Minimum investment: $[Amount].

2. Valuation

• Pre-money valuation: $[Amount].
• Price per share/unit: $[Amount].
• Capitalization table: [Attach schedule showing fully diluted shares].

3. Use of Proceeds

• [Working capital, product development, marketing, debt repayment].

4. Closing Date

• Target initial closing: [Date].
• Subsequent closings permitted until [Date].

5. Conditions to Closing

• Satisfactory completion of due diligence.
• Execution of definitive agreements (Stock Purchase Agreement, Investor Rights Agreement, etc.).
• Board and shareholder approvals.
• Regulatory or third-party consents.

6. Rights and Preferences (for preferred securities)

• Liquidation Preference: [1x] non-participating/participating, senior to common.
• Dividends: [Non-cumulative/cumulative] at [Rate]% per annum.
• Conversion: Convertible into common stock at any time; automatic upon qualified IPO.
• Anti-Dilution Protection: [Weighted average/full ratchet].
• Voting Rights: Vote with common on an as-converted basis plus protective provisions.
• Protective Provisions: [List actions requiring preferred approval].
• Redemption Rights: [None/after X years at investor option].

7. Board of Directors

• Board size: [Number].
• Investor board seat: [Yes/No]; specify appointment rights.
• Observer rights: [Describe].

8. Information Rights

• Annual audited financial statements.
• Quarterly unaudited statements and budget.
• Inspection rights upon reasonable notice.

9. Registration Rights (if applicable)

• Demand registration: [Number] requests after [Time Period].
• Piggyback rights.
• S-3 shelf eligibility conditions.

10. Right of First Refusal / Co-Sale

• Investors granted ROFR on founder share transfers.
• Co-sale participation rights for significant transfers.

11. Employee Equity Pool

• Post-money option pool of [Percentage]% reserved for employee equity incentives.

12. Founder Matters

• Founder vesting schedule: [Percentage]% vested, remainder over [Number] years with [Cliff].
• Assignment of IP and invention agreements required.

13. Legal and Transaction Expenses

• Company to reimburse investor legal fees up to $[Cap] at closing.

14. Confidentiality

• Term sheet contents confidential; disclosure only as required by law.

15. Exclusivity / No-Shop (Optional)

• Company agrees not to solicit competing proposals for [Number] days.

16. Non-Binding Effect

• Sections [identify binding sections] are binding; others are non-binding and subject to definitive agreements.

17. Signatures

Company: ______________________
Name: [Authorized Signatory]
Title: [Title]

Investor: ______________________
Name: [Investor Signatory]
Title/Capacity: [Title]

This term sheet summarizes principal terms of a proposed investment and does not constitute a legally binding commitment except as noted.