Term Sheet Conditions
Integrative
Distributive
Mutual Agreement
Deal Structure
Valuation
Investment Amount
Preferred vs Common
Payment of Legal Fees
Stock Option Plans
Liquidation Preference
Management Salaries
Redemption Rights
Anti-Dilution
Drag-Along, Tag-Along
Vesting of Founder Shares
Board of Directors
Security
Financial Reporting
Pay-to-Play
Confidentiality
Right of First Refusal Conversion of Shareholder Loans Tax Credit Application
Read and Heed Pay-to-play should never be in an Angel deal. This is a provision that should exist only in VC deals… No small Angel should ever be in a deal with a pay-to-play provision because they will get hurt if there’s a big investor. The big investor will often find a way to trigger that and push you down. If they don’t, shame on them, because they should. That’s the way the rules are written. — Peter Weiss , in Maher, Startup Wealth 4.5 Deal Syndication Three-quarters of all reported Angel investments in Canada involve deal syndication with other organizations outside of the Angel’s core group of co-investors (NACO’s 2014 Report on Angel Investing Activity in Canada ). These deals can be as small as $250,000 or larger than $10 million. There is a difference between Angels who co-invest within a single Angel group and Angel groups that syndicate a deal between different organizations. In a co-investment, all Angels know each other, select a lead investor, and work together to conduct due diligence and negotiate terms. In a deal syndication, one group will do all this work and then offer this as a take-it-or-leave-it package deal to other organizations that will invest along identical terms. Trust is everything when evaluating whether or not to join a syndicate. On the one hand, it is great to get access to excellent and thoroughly vetted deals without having to do all the heavy lifting. But on the other hand, you need to really know and trust that those who crafted the deal are good at it and have a similar investment philosophy as everyone else in the syndicate. Good syndicate partners are nurtured over time, and groups will often proactively share deals.
How to Achieve Good Returns
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