Understanding Funding Term Sheets [Whiteboard Friday]February 8, 2013 2013-02-08 15:00
Understanding Funding Term Sheets [Whiteboard Friday]
When a business raises investment in seed, angel or VC then would need you to sign a term sheet. In this episode of eLagaan Whiteboard Friday, the eLagaan team explains the importance of term sheet and how to deal with it.
Some of the things to consider while creating the terms sheet are:
* Converting existing debts to equity
* Different avenues of taking equity (against investment, against consulting)
* Tranches of investment
* Conditions for tranches
* Minimum ROI / Mandatory buy back
* Any restrictions & lock-in period for founders
* Compliance requirements
* Cap on due diligence expenses
We also recommend that you look at our other whiteboard friday video which talks about term sheets here.