NVCA (National Venture Capital Association) Term Sheet

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I. Introduction

The NVCA Term Sheet serves as a foundational document outlining the key terms and conditions of a venture capital investment. This agreement establishes the framework for the investment process and sets expectations for both the investor and the [Your Company Name]. It is crucial for both parties to thoroughly review and negotiate the terms outlined in this document to ensure alignment and mitigate potential conflicts down the line.

II. Parties

A. Investor: [Investor Name]

B. Startup Company: [Your Company Name]

III. Key Terms

A. Valuation

1. The pre-money valuation of the Startup Company is determined to be a Pre-money Valuation of $5,000,000.

2. The post-money valuation, including the investment amount, stands at Post-money Valuation $7,000,000.

B. Investment Amount

• The Investor agrees to invest $2,000,000 in the Startup Company in exchange for 28% ownership.

C. Liquidation Preference

1. The Liquidation Preference outlines that the Investor shall receive 1.5 times their original investment before any distributions to the common shareholders in the event of a liquidation event.

2. The Liquidation Preference may be participating or non-participating, as negotiated between the parties.

IV. Governance and Control

A. Board of Directors

• The composition of the Board of Directors shall be 5 members, with 2 appointed by the Investor and 3 appointed by the Founders.

B. Protective Provisions

• The Investor shall have the right to approve certain corporate actions, including but not limited to:

  1. Amendments to the Company's Articles of Incorporation or Bylaws.

  2. Issuance of additional securities.

  3. Sale or disposition of the Company's assets exceeding $500,000 in value.

V. Vesting and Equity Incentive Plan

A. Vesting Schedule

• 25% of the Founder's equity shall vest over 4 years with a 1-year cliff.

B. Equity Incentive Plan

• The Company shall establish an Equity Incentive Plan, providing for the issuance of stock options to key employees, consultants, and advisors.

VI. Confidentiality and Non-Disclosure

A. Confidential Information

• Both parties agree to maintain the confidentiality of all information shared during the negotiation and execution of this agreement.

B. Non-Disclosure

• The Investor shall not disclose any confidential information obtained during the due diligence process to any third party without the prior written consent of the Startup Company.

VII. Miscellaneous

A. Governing Law and Jurisdiction

• This agreement shall be governed by and construed following the laws of the State of [State], and any disputes arising hereunder shall be subject to the exclusive jurisdiction of the courts of [State].

B. Entire Agreement

• This Term Sheet constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior negotiations, understandings, and agreements, whether written or oral.

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[Your Name]
[Your Position]
[Your Company Number]

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