A n I n t r o d u c t i o n t o Te r m S h e e t s
With Rob Koturbash

www.mapleleafangels.com

|

info@mapleleafangels.co...
Term Sheets – an Introduction
• A term sheet is the basis of a legal agreement
between an investor(s) and a company,
outli...
Goals
• Hope for the best but plan for the worst
• Protect downside risk while maximizing upside
potential
• Forms the bas...
Critical Items
•
•
•
•
•

What do you want the deal to look like?
Type of security to be issued
Valuation and amount to be...
Types of Investment
• Equity
– Common
– Preferred

• Debt
– Straight
– Convertible

• Angel investments capture upside rew...
Seed Preferred Structure
• Allows upside value capture
• Introduces set of rights available only to
investors
– Anti dilut...
Aligning Interests between
Investors and Founders
• Identify key value drivers in the investment
–
–
–
–

Product launch
I...
Corporate Governance
• Goal is to achieve a balanced board from the
start
• 5 person board minimum – 3 person boards do
no...
C O N TA C T
R o b Ko t u r b a s h
r ko t u r b a s h @ m a p l e l e a fa n g e l s . c o m
www.mapleleafangels.com

|

...
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Introduction to Term Sheets

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A Lunch and Learn Session delivered by MLA Member Rob Koturbash on Term Sheets in Angel Investing.

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Introduction to Term Sheets

  1. 1. A n I n t r o d u c t i o n t o Te r m S h e e t s With Rob Koturbash www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  2. 2. Term Sheets – an Introduction • A term sheet is the basis of a legal agreement between an investor(s) and a company, outlining the terms and conditions of an investment into the target company. www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  3. 3. Goals • Hope for the best but plan for the worst • Protect downside risk while maximizing upside potential • Forms the basis of a legal document • Aligns interests of founders with interests of investors • Establishes corporate governance www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  4. 4. Critical Items • • • • • What do you want the deal to look like? Type of security to be issued Valuation and amount to be invested Voting and information rights Board establishment and representation www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  5. 5. Types of Investment • Equity – Common – Preferred • Debt – Straight – Convertible • Angel investments capture upside reward, therefore Equity or Convert Debt are instruments used www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  6. 6. Seed Preferred Structure • Allows upside value capture • Introduces set of rights available only to investors – Anti dilution – Investor board seats – Information rights – Redemption rights – Rights related to future investment rounds www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  7. 7. Aligning Interests between Investors and Founders • Identify key value drivers in the investment – – – – Product launch IP strategy Strategic partnerships Sales targets • Focus on two or three key metrics • Upon value creation event, management can claw back a portion of equity if they have demonstrated superior execution – Warrant structure www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  8. 8. Corporate Governance • Goal is to achieve a balanced board from the start • 5 person board minimum – 3 person boards do not work • Expandable easily to 7 – Current CEO – Founder representative – 2 Investor representatives – Independent www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels
  9. 9. C O N TA C T R o b Ko t u r b a s h r ko t u r b a s h @ m a p l e l e a fa n g e l s . c o m www.mapleleafangels.com | info@mapleleafangels.com | 416.646.6235 | @mapleleafangels

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