Note: This download is designed for business owners who have a basic understanding of venture capital financing and/or who are currently searching for venture capital. It is presented only as a sample document for educational and reference purposes. In any venture capital negotation, it is important to retain legal counsel, and this document should in no way be used to substitute for such counsel.
Getting a term sheet from a venture capitalist is a key milestone for entrepreneurs. A term sheet is essentially an outline of the deal terms that a venture capitalist is proposing before investing in a business. The term sheet usuallly undergoes negotiation before it is signed.
This sample term sheet is provided by the law firm Morse, Barnes-Brown & Pendleton P.C. Chip Morse, a founding partner of Morse, Barnes-Brown & Pendleton P.C., is featured in an article about term sheets in the September 2000 issue of Inc. magazine. Morse is also a Law & Taxation mentor at inc.com.
This term sheet includes annotations explaining key terms; Jeffrey Steele, an associate with Morse, Barnes-Brown & Pendleton P.C., provided the annotations.
How to use this term sheet:
This sample term sheet for Series A round of financing, for a fictitious corporation, details the major points of a hypothetical investment deal for a first-round "Series A Convertible Preferred Stock" financing by a venture capital investment firm. The term sheet should be used as a reference and example only. Each page outlines principal points that may arise when negotiating with investors, but the document does not constitute the only possible arrangement between entrepreneurs and investors.
File description: This file contains a Microsoft Word 6.0/95 document. To use this file, you must have Microsoft Word 6.0 or higher.