The Funding Term Sheet serves as a crucial preliminary document in Danish investment transactions, typically used when a company is seeking to raise capital through equity or convertible instruments. It provides a structured summary of the key commercial and legal terms that will form the basis of the final investment agreements. While primarily non-binding, the term sheet helps align parties' expectations early in the negotiation process and streamlines the path to final documentation. Under Danish law, particular attention must be paid to compliance with the Danish Companies Act regarding share classes, corporate governance, and capital requirements. The document is especially important in venture capital and private equity transactions, where it helps establish clear parameters for valuation, investor rights, board composition, and exit provisions before significant resources are committed to full documentation.
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Key Requirements PROMPT example:
Funding Term Sheet
I need a Funding Term Sheet for a Series A investment round of €5 million in my Danish technology startup, with provisions for a 15% ESOP pool and standard venture capital terms including 1x non-participating liquidation preference.
1. Parties: Identification of the company, lead investor(s), and any other participating investors
2. Background: Brief description of the company, the purpose of the investment, and current capitalization
3. Definitions: Key terms used throughout the term sheet
4. Investment Amount: Total investment size and any tranching arrangements
5. Valuation: Pre-money valuation and resulting post-money valuation
6. Type of Securities: Description of the securities being issued (e.g., preferred shares, convertible notes)
7. Closing Conditions: Key conditions that must be met before the investment can close
8. Investor Rights: Key rights attached to the investment (voting, anti-dilution, etc.)
9. Board Composition: Structure and composition of the board post-investment
10. Documentation: List of key documents to be executed at closing
11. Binding Provisions: Specification of which terms are binding (typically confidentiality, exclusivity, and governing law)
12. Timeline: Expected timeline for completing the investment
1. Liquidation Preference: Terms for preferential returns in case of liquidation - included when offering preferred shares
2. Anti-dilution Protection: Provisions protecting against future down rounds - included for most institutional investments
3. Drag-Along Rights: Rights forcing minority shareholders to join in a company sale - included for majority investments
4. Tag-Along Rights: Rights allowing minorities to join in sales by majority - included for minority protection
5. Founder Vesting: Vesting terms for founder shares - included for early-stage investments
6. Employee Share Pool: Details of employee option pool - included when establishing/expanding ESOP
7. Information Rights: Specific reporting requirements - included for significant investments
8. Registration Rights: Rights related to future IPO - included for larger investments with exit potential
9. Exclusivity Period: Period of exclusive negotiations - included when required by lead investors
1. Cap Table: Current and post-investment capitalization table
2. Key Terms Definitions: Detailed definitions of technical terms used in the term sheet
3. Timeline Schedule: Detailed timeline for due diligence and closing process
4. Material Agreements: List of material agreements requiring review or amendment for closing
Authors
Relevant legal definitions
Company
Investors
Lead Investor
Founders
Investment Amount
Pre-Money Valuation
Post-Money Valuation
Preferred Shares
Share Price
Conversion Rights
Anti-dilution Protection
Liquidation Event
Liquidation Preference
Participating Rights
Board of Directors
Reserved Matters
Drag-Along Rights
Tag-Along Rights
Information Rights
Preemptive Rights
ESOP
Option Pool
Fully Diluted Share Capital
Closing
Closing Date
Due Diligence
Material Adverse Change
Confidential Information
Exclusivity Period
Binding Provisions
Transaction Documents
Articles of Association
Shareholders' Agreement
Investment Agreement
Majority Investors
Qualified IPO
Exit
Warrants
Dividend Rights
Pro Rata Rights
Permitted Transfer
Investors
Lead Investor
Founders
Investment Amount
Pre-Money Valuation
Post-Money Valuation
Preferred Shares
Share Price
Conversion Rights
Anti-dilution Protection
Liquidation Event
Liquidation Preference
Participating Rights
Board of Directors
Reserved Matters
Drag-Along Rights
Tag-Along Rights
Information Rights
Preemptive Rights
ESOP
Option Pool
Fully Diluted Share Capital
Closing
Closing Date
Due Diligence
Material Adverse Change
Confidential Information
Exclusivity Period
Binding Provisions
Transaction Documents
Articles of Association
Shareholders' Agreement
Investment Agreement
Majority Investors
Qualified IPO
Exit
Warrants
Dividend Rights
Pro Rata Rights
Permitted Transfer
Clauses
Investment Terms
Valuation
Share Class Rights
Board Composition
Voting Rights
Pre-emptive Rights
Transfer Restrictions
Drag-Along Rights
Tag-Along Rights
Anti-dilution Protection
Liquidation Preference
Dividend Rights
Information Rights
Registration Rights
Conversion Rights
Employee Stock Option Pool
Representations and Warranties
Conditions Precedent
Confidentiality
Exclusivity
Due Diligence
Costs and Expenses
Governing Law
Binding Effect
Non-Compete
Right of First Refusal
Founder Commitments
Exit Rights
Amendment Rights
Dispute Resolution
Valuation
Share Class Rights
Board Composition
Voting Rights
Pre-emptive Rights
Transfer Restrictions
Drag-Along Rights
Tag-Along Rights
Anti-dilution Protection
Liquidation Preference
Dividend Rights
Information Rights
Registration Rights
Conversion Rights
Employee Stock Option Pool
Representations and Warranties
Conditions Precedent
Confidentiality
Exclusivity
Due Diligence
Costs and Expenses
Governing Law
Binding Effect
Non-Compete
Right of First Refusal
Founder Commitments
Exit Rights
Amendment Rights
Dispute Resolution
Relevant Industries
Technology
Biotech
Fintech
Green Energy
E-commerce
Healthcare
Software
Manufacturing
Clean Technology
Professional Services
Consumer Goods
Digital Media
Real Estate
Agriculture Technology
Education Technology
Relevant Teams
Legal
Finance
Corporate Development
Executive Leadership
Investment
Business Development
Compliance
Board of Directors
Advisory Board
Mergers & Acquisitions
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Investment Director
Venture Capital Partner
Private Equity Manager
Corporate Lawyer
Investment Manager
Startup Founder
Business Development Director
Board Member
General Counsel
Investment Analyst
Corporate Development Manager
Financial Controller
Investment Associate
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