Convertible Note Financing (Seed-Stage Startup) Term Sheet

This legal template is designed to outline the terms and conditions of Convertible Note Financing for a startup company in its seed-stage, operating under the laws and regulations of the United States. Convertible Note Financing is a common investment structure, particularly for early-stage startups, where an investor provides a loan to the company that can later be converted into equity (usually common stock) under certain predefined conditions.

This term sheet template serves as a preliminary agreement between the startup company and potential investors, setting forth the key terms of the financing arrangement. It covers important aspects such as the amount of the investment, the interest rate or discount rate at which the convertible note converts into equity, and the maturity date of the note. Additionally, the template may include provisions regarding the investor's rights, such as information rights, veto rights, or participation rights in future funding rounds.

This legal document aims to provide a clear understanding of the rights and obligations of both the startup company and investors, serving as a foundation for further detailed agreements and negotiations. By using this template, both parties can establish a common understanding and framework for the convertible note financing, facilitating the investment process and promoting transparency and fairness in the transaction.

Importantly, as this template is designed specifically for the United States jurisdiction, it ensures compliance with relevant U.S. laws and regulations, giving confidence and legal validity to both the startup and investors. It is important, however, to seek legal counsel to verify and tailor the terms to the specific needs and circumstances of the startup company.