Term Sheet for Venture Capital Investment

I. Introduction

This Term Sheet outlines the proposed terms and conditions for [Your Company Name]'s potential venture capital investment. It serves as a preliminary agreement between [Your Company Name] and the prospective investor, [Investor Name], detailing the key terms of the investment round.

II. Investment Details

1. Investment Amount: The investor agrees to invest $5,000,000 in [Your Company Name] in exchange for an ownership stake.

2. Valuation: The pre-money valuation of [Your Company Name] is set at $10,000,000, with the post-money valuation calculated as the sum of the pre-money valuation and the investment amount.

III. Investment Terms

1. Security Type: The investment will be made in the form of Preferred Stock.

2. Investment Structure: The investment will be structured as a Series A Financing Round.

3. Investment Conditions: The investment is subject to customary closing conditions, including due diligence, legal documentation, and regulatory approvals.

4. Investor Rights: The investor shall have certain rights, including but not limited to:

   • Board Representation: The right to appoint one board member(s) to [Your Company Name]'s board of directors.

   • Information Rights: Regular updates and financial reports are provided to the investor.

   • Anti-dilution Protection: Protection against dilution in subsequent financing rounds.

IV. Corporate Governance

1. Board of Directors: The board of directors of [Your Company Name] will consist of five (5) members, with [Investor Name] having the right to appoint one (1) director(s).

2. Voting Rights: Major corporate decisions require the approval of 60% of the board, with certain matters requiring the unanimous consent of all directors.

V. Exit Strategy

1. Liquidation Preference: In the event of a liquidation or sale of the company, the investor shall have the right to receive 2x of their initial investment before any distribution is made to other shareholders.

2. Right of First Refusal: The investor shall have the right of first refusal to purchase additional shares in any future financing rounds.

VI. Miscellaneous

1. Confidentiality: Both parties agree to maintain the confidentiality of any proprietary information exchanged during the negotiation process.

2. Governing Law: This agreement shall be governed by and construed following the laws of [Jurisdiction], without regard to its conflict of laws principles.

VII. Signatures

This Term Sheet is subject to negotiation and execution of definitive agreements by both parties. By signing below, the parties acknowledge their intent to proceed in good faith with the investment transaction outlined herein.

[Your Name]

[Your Position]

[Your Company Name]

[Investor Name]

[Investor Position]

[Investors Company Name]

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