Angel Term Sheet Evolution Video

This video is from a Bellingham Angel Group Education Breakfast on Angel investor term sheets. Dan Rosen, Chair of the Alliance of Angels in Seattle, and I talk about how term sheets for angel investors have evolved over the past few years.

Term sheets are an especially important topic right now as angel groups work to develop best practices on syndication (or co-investment.)

Dan introduces the Rosen Light Pref Angel Term Sheet as a model for future angel investments.

We discuss:

  • Preferred shares, exchangeable shares and common shares
  • Vesting, protective provisions, reporting obligations, governance terms
  • When common shares work and when they don’t
  • Everything flows from the valuation – Excel is your friend
  • Participating prefs, protective provisions, being entrepreneur friendly
  • Drag alongs, anti-dilution, discounts and warrants
  • Board compensation, lead investors, working with entrepreneurs
  • Why all directors should make a meaningful investment, selecting good directors
  • Exit alignment, redemption rights, exit ‘push’ and ‘pull’, valuation
  • Balancing protective provisions and governance
  • Working with lawyers and negotiating with entrepreneurs
  • Why it’s a good idea to negotiate the term sheet and valuation first
  • How lead investors help before and after the investment
  • Optimum financing strategies, valuation, capital efficiency
  • What Angels and VCs think of each other and how its changed recently
  • Is valuation a science or a black art

The full high definition video of this education event is online here (click on “Fullscreen Toggle” for best viewing.)