Convertible Note Financing Term Sheet (Seed-Stage Startup)
Summary
This template is a financing term sheet for convertible notes issued in connection with the seed-stage financing of a startup company. A convertible note is a loan from the investor to the company that converts to stock upon a preferred stock financing that meets certain conditions. This template includes practical guidance, drafting notes, alternate clauses, and optional clauses. Startups use seed-stage financing to raise operational capital for a period of 12-24 months in which they attempt to build their product and test the market. A convertible note is the most common instrument to implement seed-stage financing. This template sets forth the terms of a proposed convertible note financing. The terms of the note described in this term sheet are generally market, with preference given to be borrower-friendly in instances where provisions are fluid in the marketplace. For a further discussion of convertible notes as well as other forms of startup financing, see Seed Financing ...