Equity Investment Term Sheet

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I. Introduction

Investment Opportunity:

Our company, [Your Company Name], a leading provider of innovative software solutions in the healthcare industry, seeks to raise $2 million in equity financing to accelerate product development and market expansion.

Investment Amount:

The total investment amount is $2 million, in exchange for a 20% equity stake in [Your Company Name].

Parties Involved:

• Investor: [Investor Name]

• Company: [Your Company Name]

II. Investment Terms

• Valuation:

  The pre-money valuation of [Your Company Name] is $8 million.

• Equity Stake:

  [Investor Name] will receive a 20% equity stake in [Your Company Name].

• Investment Structure:

  The investment will be structured as a preferred stock with standard liquidation preferences.

• Founder Vesting:

  Founders' shares will vest over four years, with a one-year cliff.

• Anti-Dilution Protection:

  [Investor Name] will have standard weighted-average anti-dilution protection.

III. Investor Rights

• Board Representation: [Investor Name] will have the right to appoint one member to the board of directors.

• Information Rights: Quarterly financial reports and annual operating plans will be provided to [Investor Name].

• Exit Rights: [Investor Name] will have tag-along rights in the event of a sale of [Your Company Name].

• Liquidation Preference: [Investor Name] will have a 1x non-participating liquidation preference.

IV. Company Representation and Warranties

• Ownership and Title: The company represents that it owns all assets and properties free and clear of any liens or encumbrances.

• Intellectual Property: The Company represents that it owns or has licensed all intellectual property necessary for its business operations.

• Compliance with Laws: The company represents that it complies with all applicable laws and regulations.

V. Conditions Precedent

• Legal Due Diligence: The investor's legal due diligence must be completed to its satisfaction.

• Approval of Governing Authorities: The investment must receive approval from the board of directors and any other required governing authorities.

• Execution of Agreements: The parties must execute the investment agreement and any related documents.

VI. Indemnification

• Company Indemnification: The company agrees to indemnify and hold harmless the investor from any losses or damages resulting from the company's breach of its representations and warranties.

• Investor Indemnification: The investor agrees to indemnify and hold harmless the company from any losses or damages resulting from the investor's breach of its obligations under the term sheet.

VII. Termination

• Mutual Agreement: The term sheet may be terminated by mutual agreement of the parties.

• Material Breach: Either party may terminate the term sheet in the event of a material breach by the other party.

• Failure to Close: If the closing conditions are not satisfied within the specified timeframe, either party may terminate the term sheet.

VIII. Miscellaneous

• Expenses: Each party will be responsible for its expenses incurred in connection with the transaction.

• Confidentiality: The parties agree to keep confidential all information relating to the transaction and the term sheet.

• Governing Law: This term sheet will be governed by and construed under the laws of the State of [State].

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