Early-Stage Term Sheets Harvard Case Solution & Analysis

This note was written as an updated variant of "The Early-Stage Term Sheet" (UV2526) and might be used in its location. In seeking funding for an early-stage company, the entrepreneur and investor will face choices about the quantity, terms, and conditions of the financing. These terms are usually set forth in a term sheet which contains a host of provisions designed to protect the worth of an investor's capital.

These terms define the investor's rights as a holder of a senior security to common stock and are designed to provide the right to monitor and control important company decisions, and to secure the investor's ownership position. The note concentrates on a few crucial aspects of these terms-antidilution, liquidation preference, dividends, control rights, and redemption-all of which are broadly seen by professionals as having best skills to change the economic yields for the parties in an early-stage investment. The examples offer a perspective on how a term could be worded in order to confer differential rights between the parties, although not meant to be exhaustive.

PUBLICATION DATE: May 08, 2015 PRODUCT #: UV6972-HCB-ENG

This is just an excerpt. This case is about FINANCE & ACCOUNTING

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