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An Investment agreement term sheet maps out the key points of a proposed investment deal before the parties draft the full legal documents. In Hong Kong's fast-paced business environment, it acts as a roadmap that outlines crucial terms like valuation, share rights, and governance structures.

While not legally binding (except for confidentiality and exclusivity clauses), these term sheets help investors and companies move efficiently through negotiations under Hong Kong securities laws. They typically cover investment amounts, milestones, board seats, and exit rights - saving time and money by getting early agreement on major deal points before involving lawyers in detailed documentation.

Use an Investment agreement term sheet when you're ready to get serious about an investment deal but want to nail down the key terms before spending time and money on full legal documentation. It's especially valuable for Hong Kong startups negotiating with venture capitalists, private equity firms, or angel investors who need to align on critical deal points early.

The term sheet becomes essential once initial discussions show promise but before conducting detailed due diligence. It helps prevent misunderstandings by documenting fundamental terms like valuation, investment structure, and control rights upfront. For complex deals involving multiple investors or cross-border elements, having this framework becomes even more crucial.

• Basic Equity Investment: Standard term sheets for straightforward equity investments, focusing on share price, investment amount, and basic investor rights
• Convertible Note Term Sheet: Outlines terms for debt that converts to equity, popular with Hong Kong startups seeking bridge financing
• Strategic Investment: Includes additional provisions for corporate investors, covering technology licensing, market access, or distribution rights
• Series Funding: More complex term sheets for institutional rounds, detailing protective provisions, board rights, and anti-dilution terms
• Joint Venture Investment: Specialized versions addressing shared control, operational responsibilities, and profit-sharing mechanisms

• Investors: From venture capitalists to angel investors, they initiate and negotiate term sheets to outline their proposed investment terms and protection rights
• Startup Founders: Review and negotiate term sheets to secure funding while protecting their interests and maintaining suitable control
• Corporate Legal Teams: Draft and review Investment agreement term sheets, ensuring compliance with Hong Kong securities regulations
• Investment Bankers: Often facilitate negotiations and help structure deal terms between parties
• Company Directors: Review and approve final terms before proceeding to formal documentation

• Company Details: Gather current capitalization, financial statements, and corporate structure documents
• Investment Terms: Define investment amount, valuation, and share class preferences
• Control Rights: Outline board composition, voting rights, and key decision thresholds
• Exit Provisions: Specify drag-along rights, tag-along rights, and IPO requirements
• Due Diligence: List key documents and milestones needed before closing
• Platform Support: Use our AI-powered platform to generate a customized term sheet that complies with Hong Kong regulations

• Investment Structure: Clear details on investment amount, valuation, and share class being offered
• Investor Rights: Anti-dilution protection, information rights, and pre-emptive rights
• Governance Terms: Board composition, voting thresholds, and reserved matters
• Exit Provisions: Tag-along rights, drag-along rights, and IPO ratchets
• Confidentiality: Binding confidentiality and exclusivity provisions
• Closing Conditions: Due diligence requirements, regulatory approvals, and timeline
• Non-Binding Statement: Clear indication that terms are non-binding except for specified clauses

An Investment agreement term sheet differs significantly from a full Investment Agreement in several key aspects. While both documents relate to investment transactions, they serve distinct purposes in Hong Kong's business landscape.

• Legal Binding Effect: Term sheets are largely non-binding documents (except for confidentiality and exclusivity provisions), while Investment Agreements are fully binding legal contracts
• Level of Detail: Term sheets provide a high-level outline of key terms, while Investment Agreements contain comprehensive legal provisions and detailed mechanics
• Timing: Term sheets come first as negotiation tools, while Investment Agreements represent the final, executable documentation
• Cost and Complexity: Term sheets are simpler and less expensive to prepare, making them ideal for initial deal framework discussions