The Houston Angel Network, Inc. Term Sheet Forms

July 01, 2001

This term sheet relates to a preferred stock equity investment.  Angels may also invest in convertible debt or common stock.  The choice of the form of investment revolves around a number of issues including control issues and liquidation priority.  An investor in preferred stock may receive mandatory board representation as well as consent rights on material corporate matters (e.g., merger, sale of assets, etc.).  Convertible debt is attractive in that it will be senior to all equity and may also be secured so that it is senior to unsecured debt.  Utilization of convertible debt may also defer valuation issues until the first venture capital round.

Email Disclaimer