Description
Above is a link to an actual term sheet issued by an early-stage venture capital fund to an early-stage company prospect. Assume you are the financial advisor or CFO of the company who received the term sheet and you have been asked by the CEO/Founder to review the term sheet and to write a high level summary for her and her co-founders as follows:
- SUMMARIZE the basic terms,
- Identify any terms that fit the description of terms included to meet "investor concerns",
- Make recommendations to the CEO and her co-founder as to:
- Whether to accept the term sheet in principle.
- Which terms, if any, to negotiate with the venture capital fund.
- Which terms, if any, are killer concerns and should not be accepted under any circumstances.
You response should be a word document (written in accordance with course guidelines in the syllabus) of approximately 500 words and should be based upon all lectures, text book readings and supplemental readings in Module 8.
Explanation & Answer
Attached is the complete solution.
Summary Terms for Series A Preferred Stock
Company: ABC, Inc., a Delaware corporation
Synopsis: This term sheet abridges the terms proposed for the venture by ABC, Inc., a gathering
of financial specialists, in the Company. It is expected exclusively as a reason for further discourse
and does not establish a legitimately restricting commitment.
Financial specialists: All Investors are Accredited, Investors.
Currency: Dollars
Closing: Approximately September XX, 2015 As soon as practicable after the Company's
acknowledgment of this Term Sheet and fulfillment of the Conditions to Closing.
Amount: Minimum Investment to close is $ $750,000,
Total Securities Offered: Maximum $1,000,000 preferred shares.
Price: $XXX per preferred share
The Utilization of Proceeds: The Company will utilize the returns from the Financing for the
accompanying purpose...
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