Term Sheet - Seed Investment
A Term Sheet Seed Investment document establishes the general terms of an investor joining your business.
Last updated February 3, 2025
Suitable for Australia
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Frequently asked questions
Use this Term Sheet if:
You are preparing for Seed Round investment and would like to set out the negotiated and key terms to an investor to join your business.
Why do I need a Term Sheet?
If you are launching your seed investment round and looking at investors coming on board to join your business (such as an angel investor), a Term Sheet is a great document as a pre-cursor to a Shareholders Agreement. It sets out the negotiated terms and clearly states the intention of both parties to enter into a legally binding agreement in the near future.
What does the Term Sheet cover
- Details of investor
- Investment round details
- Class of shares (preference shares or ordinary shares)
- Number of shares
- Investment amount
- Price per share
- Percentage of equity
- Liquidation preference
- Conversion mechanics
- Anti-dilution
- Dividends provision
- Share cap table
- Timetable to complete agreement
- Key provisions of shareholders and subscription agreements
- Details of board members
- Details of shareholders
- Decisions that need resolutions
- Exclusivity
- Confidentiality
Other documents you may need:
View Sample Term Sheet - Seed Investment
The Legal Risk Score of a Term Sheet - Seed Investment Template is Medium
Our legal team have marked this document as low risk considering:
- The document allows the investor a period to conduct further due diligence and potentially withdraw from the transaction, which could leave the company in a position of uncertainty and potential loss of other opportunities during this period.
- The exclusivity clause restricts the company from engaging with other potential investors or entertaining other proposals for a specified timeframe, which might limit the company's opportunities to secure possibly better or more immediate investments.
- The costs clause specifies that the company bears all of the investor’s third-party expenses related to the transaction up to a certain limit, which could result in unforeseen financial burden on the company if these costs exceed initial estimates.
Assuming users have a basic understanding of such agreements, the risks are typical of investment negotiations and can be managed with careful planning and legal guidance.and risk as the efforts of both parties might not result in a secured contract.
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