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Funding Term Sheet
"I need a Funding Term Sheet for a Series A investment of USD 5 million in my healthcare technology startup based in Bangalore, with provisions for a foreign investor from Singapore and ESOP allocation of 10% of the share capital."
1. Parties: Details of the Company and the Investor(s)
2. Background: Brief description of the company and the purpose of the proposed investment
3. Definitions: Key terms used throughout the term sheet
4. Investment Terms: Amount of investment, valuation, and price per share
5. Security Type: Type of securities being issued (e.g., equity shares, preference shares, convertible notes)
6. Pre-Money Valuation: Agreed valuation of the company before the investment
7. Capitalization Table: Pre and post-money ownership structure
8. Investor Rights: Voting rights, board representation, and other control provisions
9. Transfer Restrictions: Limitations on transfer of shares including right of first refusal and co-sale rights
10. Information Rights: Investor's rights to receive financial and other company information
11. Confidentiality: Obligations regarding confidential information
12. Binding Effect: Clarification of which provisions are binding and non-binding
13. Closing Conditions: Conditions that must be met before investment completion
1. Anti-dilution Protection: Protection against future down rounds, used in most preferred stock financings
2. Exclusivity: Period during which the company cannot seek other investors, included when investor requires exclusivity
3. Founder Vesting: Vesting schedule for founder shares, typically included in early-stage investments
4. Drag-Along Rights: Right to force other shareholders to join in the sale of the company, common in majority investments
5. Registration Rights: Rights related to future IPO registration, typically for later-stage investments
6. Participation Rights: Rights to participate in future funding rounds, optional for minority investors
7. Employee Stock Option Pool: Creation or expansion of ESOP, included when talent retention is crucial
8. Foreign Investment Provisions: Special provisions required for foreign investors, included only with international investors
1. Cap Table Schedule: Detailed breakdown of current and post-investment shareholding
2. Key Terms Definition Schedule: Detailed definitions of technical terms used in the term sheet
3. Conditions Precedent Schedule: Detailed list of conditions to be satisfied before closing
4. Investor Rights Schedule: Detailed description of specific investor rights and protections
5. Reserved Matters Schedule: List of actions requiring investor approval
6. Use of Funds Schedule: Detailed breakdown of proposed use of investment proceeds
Authors
Technology
E-commerce
Healthcare
Financial Services
Education Technology
Manufacturing
Clean Energy
Biotechnology
Software as a Service
Consumer Internet
Artificial Intelligence
Digital Media
Retail
Agriculture Technology
Logistics
Legal
Finance
Corporate Development
Investment
Executive Leadership
Business Development
Compliance
Company Secretarial
Strategy
Mergers and Acquisitions
Chief Executive Officer
Chief Financial Officer
Investment Manager
Venture Capital Associate
Private Equity Director
Corporate Lawyer
Investment Banker
Company Secretary
Startup Founder
Managing Director
Head of Legal
Chief Investment Officer
Business Development Director
Fund Manager
Corporate Development Manager
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