Angel Term Sheet Evolution – Part 1 – Basil Peters – The One Page Term Sheet
Bellingham Angel Group Education Breakfast November 17, 2009 – Basil Peters and Dan Rosen
Highlights of Angel Term Sheet Evolution- Part 1:
- Welcome to Dan Rosen, Chair of the Alliance of Angles in Seattle
- How my thinking on term sheets has evolved
- How things differ in Washington State and Delaware
- It is still early days in the evolution of angel investing
- Term sheets is the most popular topic on my blog
- Investors rights and where angels need a veto
- Angel investing today is where Venture Capital was in the early 1980s
- The fundamental philosophies in the One Page Term Sheet
- How boards can dilute out shareholders by issuing options
- Angel group syndication, and co-investment, is new but very important
- Assumes a good structure and perpetual good governance
- Defining the majority and why it is so important
- Syndication requires angels to have wide agreement on term sheets
- Important elements: KISS and being fair and equitable
- Reporting obligations and why is so difficult to keep it going
- What’s changed since our last education event on term sheets
- Why convertible notes became overused
- Legal costs should be capped and the company should pay
- The National Venture Capital Association “Heavy Preferred Term Sheet”
- The exchangeable share – a tradeoff
- Board structure – a majority of independents and selection
- Angels are not VCs and we need term sheets optimized for angels
- Share and option vesting – possibly the most important term
- Why I believe all directors should make a meaningful investment
- The term sheet is the most important document in the relationship
- How vesting tests the entrepreneurs exit alignment
- Common shares work well if there will always be a good board
- How a bad term sheet can kill a financing and the company
- Drag alongs should be in the company articles
- Today there are very big challenges building really good boards
- Why it’s so difficult to fix a bad term sheet
- How pref shares can veto the majority on important decisions
- Where the One Page Term Sheet works well
- Introducing the “Rosen Light Pref” term sheet
- Super majorities and dissenters’ rights
- Why the Rosen Light Pref Term Sheet works better
Part 2 of this video online here.
Part 2 of this video online here.
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That’s a creative answer to a difficlut question