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An investment agreement term sheet lays out the key points of a potential investment deal between investors and companies in Canada. It's like a high-level summary that captures the most important terms before lawyers draft the full legal documents - things like valuation, investment amount, and investor rights.

While not legally binding (except for confidentiality clauses), term sheets save time and money by getting everyone aligned on major deal points early. They're especially common in venture capital and private equity transactions, where they help both sides avoid costly misunderstandings about fundamental deal terms before diving into complex legal paperwork under Canadian securities laws.

Use an investment agreement term sheet when you're ready to seriously negotiate funding for your business but want to nail down the big points before spending time and money on full legal documentation. It's particularly valuable during early discussions with venture capitalists, angel investors, or private equity firms in Canada's startup ecosystem.

The right time to create a term sheet is after initial investor interest but before due diligence begins. This helps both parties align on key terms like valuation, board seats, and voting rights upfront. Having these points documented early prevents major disagreements from surfacing later when you're deep into the expensive process of finalizing binding agreements.

• Equity Investment Term Sheets: Used for traditional venture capital or angel investor deals, focusing on share prices, ownership percentages, and voting rights
• Convertible Note Term Sheets: Popular with early-stage startups, outlining debt that converts to equity later, including discount rates and valuation caps
• SAFE Term Sheets: Simpler agreements common in seed rounds, detailing future equity rights without debt components
• Strategic Investment Term Sheets: Used when corporate investors want both financial returns and business partnerships, including commercial agreements
• Revenue-Based Term Sheets: Alternative financing structure where repayment is tied to monthly revenue, common in stable-revenue businesses

• Startup Founders: Review and negotiate term sheets when seeking investment, often working with their legal counsel to understand implications
• Venture Capital Firms: Usually draft the initial investment agreement term sheet, setting key terms and conditions
• Corporate Lawyers: Review, refine, and advise on term sheets, ensuring compliance with Canadian securities laws
• Angel Investors: Negotiate and sign term sheets for early-stage investments, often with simpler terms than VC deals
• Board Members: Review and approve term sheets as part of their governance duties, particularly for significant investments

• Company Details: Gather current cap table, financial statements, and corporate structure documents
• Investment Terms: Define investment amount, valuation, and type of securities being offered
• Governance Rights: Determine board composition, voting rights, and key decision thresholds
• Exit Provisions: Outline drag-along rights, tag-along rights, and anti-dilution protections
• Legal Requirements: Check Canadian securities regulations for your province and investor type
• Digital Tools: Use our platform to generate a legally sound term sheet that includes all required elements

• Investment Terms: Amount, valuation, type of securities, and price per share
• Investor Rights: Voting powers, board representation, and information access rights
• Protection Provisions: Anti-dilution terms, pre-emptive rights, and right of first refusal
• Exit Mechanisms: Drag-along and tag-along rights, IPO provisions
• Confidentiality: Binding non-disclosure terms and exclusivity period
• Governing Law: Specify applicable Canadian province and dispute resolution process
• Conditions Precedent: Due diligence requirements and regulatory approvals needed

A term sheet differs significantly from a full Investment Agreement. While both documents deal with investment terms, they serve distinct purposes in Canadian business transactions.

• Legal Status: Term sheets are usually non-binding summaries (except for confidentiality clauses), while investment agreements are fully binding legal contracts
• Detail Level: Term sheets outline key points in 3-5 pages, while investment agreements contain extensive legal language and provisions across 30+ pages
• Timing: Term sheets come first during negotiations, while investment agreements are drafted after parties agree on basic terms
• Cost and Complexity: Term sheets are relatively quick and inexpensive to create, while investment agreements require significant legal work and due diligence
• Purpose: Term sheets facilitate initial agreement on major points, while investment agreements provide comprehensive legal protection and enforcement mechanisms