������Ƶ

An Investment agreement term sheet is a preliminary document that outlines the key points of a potential investment deal between investors and companies in Nigeria. It captures essential details like investment amount, company valuation, ownership stakes, and key rights before drafting the full legal agreement.

Used widely in Nigerian venture capital and private equity transactions, term sheets help parties quickly align on major deal points while saving time and legal costs. Though not typically binding except for confidentiality clauses, these documents follow formats recognized by the Securities and Exchange Commission and serve as the foundation for final investment documentation under Nigerian corporate law.

Use an Investment agreement term sheet when you're ready to formalize preliminary investment discussions but aren't yet prepared for a full legal agreement. It's particularly valuable during funding rounds with Nigerian venture capital firms, angel investors, or private equity groups where you need to establish clear expectations early in negotiations.

The term sheet becomes essential once both parties have expressed serious interest and agreed on basic deal parameters. Creating one at this stage helps prevent misunderstandings, speeds up the final documentation process, and protects confidential information under Nigerian securities laws. It's especially important for startups seeking Series A funding or established companies pursuing growth capital.

• Basic Equity Investment Term Sheet: Used for straightforward investments where investors receive common shares, typically in early-stage Nigerian startups
• Convertible Note Term Sheet: Outlines debt that converts to equity, popular among Nigerian tech startups seeking bridge financing
• Preferred Share Investment Term Sheet: Details special rights and privileges for investors, common in Series A+ rounds with institutional investors
• Strategic Investment Term Sheet: Used for corporate investments with specific industry focuses, including operational collaboration terms
• Asset-backed Investment Term Sheet: Structured for investments secured by company assets, common in real estate and manufacturing sectors

• Investors: Angel investors, venture capital firms, and private equity funds who initiate or participate in investment negotiations and provide capital
• Company Founders: Entrepreneurs and business owners seeking funding who work with legal counsel to review and negotiate terms
• Corporate Lawyers: Draft and review term sheets to ensure compliance with Nigerian investment laws and protect client interests
• Investment Bankers: Often facilitate deals and help structure term sheets for larger transactions
• Company Directors: Review and approve term sheets before proceeding with formal investment agreements
• Financial Advisors: Provide guidance on valuation and financial terms to both investors and companies

• Company Information: Gather current valuation, financial statements, ownership structure, and business registration details
• Investment Details: Define investment amount, type of securities offered, and proposed ownership percentages
• Due Diligence: Complete basic company background checks and verify compliance with Nigerian investment regulations
• Key Terms: List major deal points including board rights, veto powers, and exit provisions
• Timeline: Establish clear milestones for closing the investment and conditions precedent
• Stakeholder Approval: Confirm internal approvals from both company board and investor decision-makers
• Documentation: Collect supporting materials like business plans and financial projections

• Investment Structure: Clear description of investment amount, type of securities, and valuation details
• Ownership Rights: Detailed breakdown of shareholding percentages and class of shares being offered
• Governance Terms: Board composition, voting rights, and major decision requirements
• Anti-dilution Provisions: Protection mechanisms for investor ownership percentage
• Exit Rights: Tag-along, drag-along, and redemption provisions
• Confidentiality Clause: Terms protecting sensitive business information
• Binding Provisions: Clearly marked sections that are legally enforceable under Nigerian law
• Conditions Precedent: Requirements to be met before investment completion

The Investment agreement term sheet is often confused with the Investment Agreement, but they serve distinct purposes in Nigerian business transactions. While both deal with investment matters, their legal weight and timing in the deal process differ significantly.

• Legal Binding Nature: Term sheets are largely non-binding documents except for confidentiality clauses, while Investment Agreements are fully binding legal contracts
• Level of Detail: Term sheets provide a high-level overview of key terms, while Investment Agreements contain comprehensive legal provisions and exact implementation details
• Timing: Term sheets come first as negotiation tools, while Investment Agreements are the final documentation that closes the deal
• Purpose: Term sheets align parties on major points quickly and cheaply, while Investment Agreements create enforceable legal obligations and protect both parties' rights
• Complexity: Term sheets are shorter and simpler, while Investment Agreements require extensive legal review and documentation