Watch this video and comment now: http://capitalmatchpoint.com/content/find-investors-term-sheets
Hosted by Dave Dambro, The Capital MatchPoint, 770-433-8250, http://capitalmatchpoint.com
I'd like to talk a little about term sheets. A term sheet is a document written early on between the entrepreneur and funding source such as venture capital firm or angel investor. The term sheet is much like a letter of intent, in that it is pre-cursor to due diligence but with more detailed information about terms of financing and rights and privileges.
Term sheets are non-binding except for confidentiality and exclusivity in negotiation. Nevertheless, the term sheet is complex and should be negotiated vigorously before signing as it is difficult to materially change during the construction and negotiation of the final agreement.
The structure of capital transactions such as those that involve venture or angel capital are less dependent on boiler plate stipulations and more reflective of the needs and preferences of the parties involved. Many legal and financial vehicles can be employed to balance the needs of both parties individual and mutual concerns. You should consult your attorney to get guidance on which suits you best. However, we can offer some food for thought when considering a term sheet.
Your personal needs:
Capital
Maintain Control of Company
Dilution of personal stock
Stock re-purchase in the event of retirement or termination as manager
Operational support and guidance that investor can offer-now many of us as entrepreneurs, and having been on both sides of the table, don't like to surrender too much control. Be careful what you give up as far as guidance and investor control-they are all going to want to have some role as to the future of the company so be prepared for that and govern yourself accordingly. If you have any questions about dealing with term sheets, just give us a call at The Capital Matchpoint. We deal with these all the time and will be happy to guide you through.
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