As an angel
- What should be in my Investor Pitch Deck?
- Where can I find a Term Sheet to guide what I offer investors?
The first question is easy: see this recent Forbes post on The Ultimate Investor Pitch Deck where you can download a free pitch deck template created from feedback from some of the world's most active investors.
The second question about Term Sheets is more complicated.
Why? Because investment terms, company valuation, and the longer-term implications of investment terms are not “one size fits all.” In fact, these are some of the biggest areas of confusion for early stage founders.
To help with that, in this post I’ve listed some great free term sheet resources available to startup and small business owners looking for guidance and sample term sheet agreements. These resources come from leading investors, VCs, and legal firms from TechStars to Founders Fund to Cooley and the Kauffman Foundation.
Here are some great term sheet and fundraising resources on the web for you.
*Disclaimer: This article should not be considered legal advice, nor am I proposing to shape terms for your company’s round.
Free Term Sheet Resources
- A good place to start to understand Term Sheets: Term Sheets Explained in Plain English by Founders Fund
- Resources and Term Sheets available for download on the TechStars site, with documents created by Cooley, LLP: TechStars Docs
- Free Sample Term Sheets from the Kauffman Foundation: Seed Term Sheet and Series A Term Sheet
Equity Term Sheets
Convertible Note Term Sheets
- TheFunded.com and Wilson Sonsini Law Firm put together this sample Convertible Note and had it written up and explained on TechCrunch
- Y Combinator’s “Simple Agreement for Future Equity” or SAFE
Alternative Financing Mechanisms
Demand Dividend Term Sheet: An alternative to straight equity or pure debt often used for Impact Investments. Developed by John
Personal Investment Contracts as innovated on and explained by Rafe Furst, angel investor, mentor at the Unreasonable Institute, co-founder of Crowdfunder.com
Creating Your Term Sheet & Equity Crowdfunding
After reading through these resources, be sure and consult and work with an experienced attorney to create the right financial offering that makes sense both for your company, and for investors.
Finally, one of the more subjective areas is Startup Valuation. To look at some data and info to guide you, take a look at this post from the Angel Capital Association on Pre-Money Valuations of early stage angel / Seed deals.
Take-aways from early stage angel deal valuations from a variety of sources are:
- Median pre-money valuation in 2011 and 2012 for software/internet startups was $2.5MM
- The median for life science startups was $3.2MM, and clean tech $3MM
- Valuations in Silicon Valley, LA, Boston, New York higher than elsewhere in US
Best of luck in your ventures, and I recommend looking at the terms and offerings of deals in your industry and are getting funded on equity crowdfunding platforms. You'll be able to see some of the basic deal terms there, and suggest you use this Pitch Deck Template for your investor pitch.
Many of these deals that are getting funded online via equity crowdfunding are publicly available for viewing due to Title II of the JOBS Act, allowing for public fundraising and advertising, though only Accredited Investors can invest today.
Title III of the JOBS Act is still held up by regulators at the SEC, so everyday citizens are yet to be included in equity crowdfunding to date.
Happy fundraising.
