Seedrs Blog

Equity crowdfunding term sheet

Equity crowdfunding term sheet

13th May 2014 by Karen Kerrigan

At Seedrs, we want every business that raises funds (and therefore every investor in those businesses) to be set up with the best chance for success in the future. Achieving success for a business often means being able to go on and raise follow-on funding from angel syndicates or venture capital firms and eventually go on to a successful merger, acquisition, private equity investment or IPO.

The plain English equity crowdfunding term sheet from Seedrs contains a summary of the key legal terms.

We’ve always set our legal standards at the level needed to be compatible with the rest of the venture funding ecosystem. This means putting in place very specific investor protections, contractual agreements and making sure that all the paperwork is in order.

Our subscription agreement, shareholder agreement, articles of association and other paperwork are all handled seamlessly through the platform. But we also wanted to provide a summary of the investment structure and key terms in one place so that every business that uses Seedrs knows what they are signing up for.

Using plain English in legal documents is an important part of increasing transparency in the venture ecosystem.

More and more venture investors are sharing their documentation so that the whole ecosystem can grow and adapt by sharing best practice. Notable European examples include the Passion Capital One Page Term Sheet and the Seed Summit Term Sheet (which had input from SeedcampIndex VenturesKima VenturesNestaNotion CapitalYandex and others). In the same spirit of openness and given our own focus on transparency, our Summary Term Sheet is provided to investors and entrepreneurs to read and learn from.

View and download the:  Seedrs Term Sheet  (Right click to download the PDF).

The term sheet is a non-binding document and provides a quick summary of the investment structure and key terms in the main legal documents that are used in the fundraising process. Parts of the term sheet that you might notice include:

  1. The focus on clean and simple ordinary shares for all investors (rather than muddled A and B class shares which may not have voting rights);
  2. The provision of professional grade investor protections to even the smallest shareholders; and
  3. The use of a nominee structure to align the interests of the company, the crowd and future investors.

As always, we’d love to hear your feedback and thoughts on how we can make things simpler, easier and clearer for everyone involved in the process of discovering and investing in great businesses.

Karen Kerrigan

I'm Chief Legal Officer for Seedrs and a Director of the UK Crowdfunding Association.

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