A term sheet is a nonbinding agreement setting forth the basic terms and conditions under which an investment will be made. We want any business that raises with us to completely understand what’s involved, so we’ve broken down the formal and technical language into something far more digestible in this guide.
This Equity Funding Term Sheet is written in plain English – not ‘legalese’ so that everyone can both appreciate and fully understand it! We want every business (and investor) to be successful on Seedrs, so our terms are specifically designed to be transparent and fair for everyone.
So, what exactly is the Seedrs’ Term Sheet?
It is a non-binding document (so it has no legal power), that shows:
- A brief summary of the investment structure
- The key terms used in the main legal documents and throughout the fundraising process
This makes it easy to see a summary of the vital investor protections and contractual agreements, such as:
- The Seedrs nominee structure – We’ll hold the shares in your company for you, so we’ll be the only shareholder listed in your cap table and company register for the Seedrs’ investment. We’ll also take care of all the general admin and paperwork.
- Due diligence – We’ll send you a short request list that’s designed to ensure that your company’s set up correctly and that key legal matters are in order. If you respond promptly, we can usually complete this process in a week.
- Our key terms – These are the commercial terms of the investment, including warranties, information rights, consent rights, pre-emption, drag-along/tag-along and share options.
- Our documentation – Including:
- Our Subscription Agreement, which is the contract between Seedrs and your company laying out the terms and amount of the investment.
- The Shareholder Agreement, which is a contract between Seedrs and your company, setting out certain terms, rights and obligations.
- A set of Articles of Association, which your company will need to adopt.
Founders often ask us “If I already have some legal documents or agreements in place, will I need to use yours?” Well, if:
- You’re a relatively early-stage company,
- Without a large cap table of significant, sophisticated investors;
- Have no professional-grade Shareholder Agreements in place, and
- You only have model articles;
Then we’re likely to ask you to join our standard documentation.
If one or more of these factors don’t apply to your company, just let us know and we’re more than likely to take an approach that’s more tailored to you and your company and the stage it’s currently at.
So, if you’ve ever wondered what a funding deal on Seedrs would involve for you, why not take a look at our Seedrs equity term sheet for yourself?
Once you’ve seen our shortened term sheet, we’re sure that you’ll agree that everything in there is absolutely fair. In fact, compare us with a traditional venture capital (VC) firm and you’ll see our terms are far less onerous. So, there’s NO demand for:
- A seat on the board.
- Consent over your annual business plan.
- Consent over commercial actions/decisions.
- Other ways of controlling the commercial direction of the company.
In fact, we don’t request any of these things. All we want is to protect minority shareholders and to foster good relations so that businesses can grow and flourish.