What is a Convertible Note Term Sheet ?
A Convertible Note Term Sheet is a simple, non-legally binding document that records the major terms of negotiation between a company and investors for the issue of convertible notes.
Creating a Convertible Note Term Sheet helps facilitate discussion between the company and its investors in the negotiation stage.
Given the non-legally binding nature of a Convertible Note Term Sheet, it is necessary for the parties to execute a Convertible Note Instrument or Convertible Note Subscription Agreement to record the binding terms in full.
Key points included
- Aggregate principal amount;
- Principal amount;
- Interest rate;
- Maturity date;
- Discount rate;
- Valuation cap; and
- Qualified financing amount.