Time/Return – Exit – Many angel investors appreciate what they do. As retired CES leaders, they are often highly experienced and successful businessmen. As investors, they can exercise their skills in a limited function. As much as they can enjoy it and love the entrepreneur as a person and inventor, the primary goal of the investor is the return of their investment. They not only want a return on their investment, but they want to within a prescribed time frame. Investors are hoping for a return in 2-3 years at the lower end and up to 6-7 years on the high end. Depending on the type of financing requested and the activities of the company, investors may have different desires to terminate transactions. In some cases, a sale or private equity agreement later at the end of the transaction could be the net break desired by investors. The structure of the agreement will have to take into account the expected and acceptable exit options. Sometimes you may find little difference between an angel or a Term Sheet investor seed and a Venture Capital Term Sheet. Both the investment structures required by engeln and the founding alliances are less limited by standardized institutional practices.
This section deals with documents that appear from time to time. There is no problem or worry if they are not used in a particular store; (i) the issues to which they relate are dealt with in other agreements; (ii) the issues to which they relate are not present or relevant in this specific agreement, or (iii) the lawyers who produce the final documents have a different editorial style. There are often several ways to express a desired result in the final documents, and different lawyers will have their own language that they prefer. However, any aspect of the agreement that has a significant impact on cost per share or investor rights should be developed as part of the meeting sheet negotiation. It is cheaper to discover things during the timesheet period where you can have only two pages to spend than during the final document phase, where documentation can include hundreds of pages and costs a lot of money in legal fees to develop. Any important term you are concerned about should be represented in the form sheet and it is then up to the lawyer to arrange them and add a number of agreements, charter changes, etc. to the final documents. The fact is that the final documents are usually several sets of documents that express in detail and make mandatory all the things you have developed in the form sheet.
These are two different things, two different parts of the process and two different sets of paper. However, the final documents should reflect the agreements reached in the reference sheet. The vast majority of seed capital financing is made under a waiver of registration and advertising obligations normally imposed by the U.S. Securities and Exchange Commission for the sale of securities to the public. The scope of the exemption is quite narrow and requires, among other things, that shares in exempt transactions be sold only to accredited investors, who are supposed to be demanding enough to evaluate a non-disclosure deal and rich enough to include a total loss of an exempt transaction. The Accredited Investor Questionnaire is the document that investors complete and sign to confirm that they are accredited investors who can participate in an exempt offer.