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Funding Term Sheet Template for India

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Key Requirements PROMPT example:

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."

Document background
The Funding Term Sheet is a preliminary document used in investment transactions in India, typically preceding the execution of detailed investment agreements. It outlines the principal terms and conditions under which an investor proposes to invest in a company, including valuation, investment structure, and key rights. While most provisions are non-binding, certain clauses like confidentiality and exclusivity may be binding. The document must comply with Indian corporate laws, securities regulations, and foreign investment rules (if applicable). It serves as a roadmap for attorneys to draft definitive agreements and helps parties align on key commercial terms before incurring significant legal expenses.
Suggested Sections

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

Optional Sections

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

Suggested Schedules

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

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions


















































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Relevant Industries

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

Relevant Teams

Legal

Finance

Corporate Development

Investment

Executive Leadership

Business Development

Compliance

Company Secretarial

Strategy

Mergers and Acquisitions

Relevant Roles

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

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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