Term Sheet Generator
Term Sheet Generator
by Richard Stump
Posted on 04/22/2009
The law firm Wilson, Sonsisni, one of the leading firms in working with start-ups in the country, has launched a free term sheet generator for use. The Altgate blog has the full story but here are some key excerpts:
"The way the tool works is that you answer a bunch of questions (north of 100) and then when you are complete it gives you a perfectly formatted Word file term sheet. Most of the questions are structured as "select from" several options often with an optional to "write your own." The beauty of having the option to select from "standard" options is that WSGR has included some market data, e.g. what percent of term sheets in up rounds in 2008 included this term."
"Apparently this is the first of many online document generator tools that WSGR intends to make publicly available on the web. There are three categories (startup, equity financing and bridge loans) so we can expect more to come."
While a startup will still need a lawyers advice in closing a deal, this is a good tool for the first pass of a term sheet or for angels/vc's/attorneys to quickly get a full formatted term sheet ready.
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Please remember that this produces an "initial draft of a term sheet" and may not necessarily fit your precise situation. Securities laws are different among the 50 states so all documents used in the offering of stock or solicitation of investment capital should be reviewed by an attorney. Violations of securities laws carry heavy criminal and civil penalties, so be careful. It is best to remember that your shareholders and investors are allies only so long as things are going well. At the first signs of trouble many shareholders and investors begin to peruse the documents for loopholes and ways to recover their money. The attorneys fees to defend against shareholder and investor lawsuits or even "inquiries" from the Attorney General's office of your state can be more than your startup can absorb.
I strongly recommend that you at least consult with an attorney you trust and that has experience in this area of law before soliciting shareholders or investors.
If you don't have a trusted startup attorney I can refer you to some that I know in Kentucky, Indiana, Ohio, or West Virginia.
Good luck!
Jim
859-231-3902
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