Startup Investment Term Sheet

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I. Introduction

This Term Sheet ("Sheet") outlines the principal terms and conditions under which [Your Company Name] ("Company") agrees to offer an investment opportunity to [Investor Name] ("Investor"). The purpose of this Sheet is to establish a framework for negotiation between the Company and the Investor, and it is not legally binding except for the provisions outlined in the Confidentiality and Exclusivity section.

II. Investment Details

• Investment Amount:

  The Investor agrees to invest $5,000,000 in the Company in exchange for 20% equity ownership.

• Valuation:

  The pre-money valuation of the Company is set at $20,000,000. The post-money valuation, after accounting for the investment, will be $25,000,000.

• Investment Tranche:

  The investment will be disbursed in 2 tranches, with the first tranche of $3,000,000 due upon the execution of this Sheet.

III. Rights and Preferences

• Voting Rights:

  The Investor shall have 25% voting rights in the Company, which shall be calculated on an as-converted basis.

• Liquidation Preference:

  In the event of a liquidation event, the Investor shall have a 1.5x preference over the Common Stockholders, with accumulated dividends, if any, before any distribution to the Common Stockholders.

• Anti-dilution Protection:

  The Investor shall be entitled to anti-dilution protection in the event of future equity issuances at a lower valuation than the valuation established in this Sheet.

IV. Governance and Management

• Board Representation:

  The Investor shall have the right to appoint 1 member to the Company's Board of Directors, subject to the Company's bylaws and applicable laws.

• Information Rights:

  The Company shall provide regular financial and operational updates to the Investor, including quarterly financial statements and annual budgets.

V. Conditions Precedent

• Due Diligence:

  The Investor's obligation to consummate the investment is subject to satisfactory completion of due diligence on the Company's operations, financials, and legal matters.

• Regulatory Approvals:

  The investment is subject to obtaining any necessary regulatory approvals, including approval from relevant governmental authorities.

VI. Confidentiality and Exclusivity

The parties agree to maintain the confidentiality of all information exchanged during the negotiation of this Sheet and to enter into an exclusivity period lasting 60 days during which neither party shall engage in discussions or negotiations with any other potential investors.

VII. Termination

• Mutual Agreement:

  This Sheet may be terminated by mutual written agreement of the parties.

• Breach:

  Either party may terminate this Sheet upon written notice if the other party materially breaches any provision herein and fails to cure such breach within 30 days of receiving written notice.

VIII. Miscellaneous

• Governing Law:

  This Sheet shall be governed by and construed under the laws of the State of [State], without giving effect to its conflict of laws principles.

• Amendment and Waiver:

  Any amendment or waiver of this Sheet must be in writing and signed by both parties.

• Severability:

  If any provision of this Sheet is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the fullest extent permitted by law.

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