Investment agreement term sheet Template for Netherlands

An investment agreement term sheet lays out the key points of a potential investment deal in simple, non-binding terms. It's the first formal step Dutch investors and companies take to outline their intentions before drafting detailed legal documents. Think of it as a blueprint that captures the most important aspects: investment amount, valuation, voting rights, and exit strategies.

Under Dutch corporate law, term sheets help both parties align their expectations early on and save time and money on legal fees. While not legally binding (except for confidentiality clauses), they serve as a roadmap for lawyers to draft the final investment agreements. Most Dutch startups and scale-ups use term sheets when negotiating with venture capitalists or angel investors.

Use an investment agreement term sheet when you're ready to move from informal discussions to serious investment negotiations. It's particularly valuable when Dutch startups begin talks with potential investors, or when established companies seek new funding rounds. The term sheet helps structure these critical conversations and saves time by addressing key points early.

The document becomes essential before spending resources on extensive due diligence or detailed legal agreements. Many Dutch entrepreneurs prepare term sheets when approaching venture capital firms, during merger discussions, or when planning significant equity investments. It's especially useful when dealing with international investors, as it ensures all parties share the same understanding of Dutch legal requirements and deal terms.

• Basic Investment Term Sheet: Covers essential elements like valuation, investment amount, and ownership structure - commonly used by Dutch startups seeking seed funding
• Series A/B Term Sheet: More complex version including detailed governance rights, anti-dilution provisions, and exit preferences - typical for larger funding rounds
• Convertible Note Term Sheet: Focuses on debt-to-equity conversion terms, interest rates, and valuation caps - popular among early-stage Dutch companies
• Strategic Investment Term Sheet: Emphasizes commercial partnerships, technology sharing, and market access rights alongside financial terms
• Bridge Financing Term Sheet: Shorter-form version for interim funding, including repayment priorities and conversion rights

• Startup Founders: Initiate and review term sheets when seeking investment, often working with their legal advisors to protect company interests
• Venture Capital Firms: Usually draft the initial term sheet, setting out their investment terms and conditions
• Angel Investors: Individual investors who negotiate simpler term sheets for early-stage investments
• Corporate Lawyers: Review and refine term sheets to ensure compliance with Dutch law and protect their clients' interests
• Investment Bankers: Often facilitate larger deals and help structure term sheets for complex transactions
• Board Members: Review and approve term sheets before proceeding with investment negotiations

• Company Valuation: Gather recent financial statements and growth projections to establish a clear pre-money valuation
• Investment Structure: Define investment amount, share class, and price per share following Dutch corporate law requirements
• Governance Rights: Outline board composition, voting rights, and any special approval requirements
• Key Financials: Compile current capitalization table, debt obligations, and financial projections
• Exit Terms: Specify liquidation preferences, anti-dilution rights, and tag-along provisions
• Due Diligence Items: Prepare list of key contracts, intellectual property rights, and material agreements
• Timeline: Set clear milestones for closing, including conditions precedent

• Investment Terms: Precise details of investment amount, share price, and type of securities being offered
• Company Information: Legal name, registration number, and address of the Dutch entity
• Shareholder Rights: Voting rights, board representation, and information rights under Dutch corporate law
• Anti-dilution Protection: Terms protecting investor ownership percentage in future funding rounds
• Exit Provisions: Tag-along and drag-along rights, plus liquidation preferences
• Confidentiality Clause: Binding terms regarding information disclosure and usage
• Exclusivity Period: Timeline during which the company cannot seek other investors
• Governing Law: Explicit reference to Dutch law and jurisdiction

A key distinction exists between an investment agreement term sheet and a full Investment Agreement. While they relate to the same transaction, they serve different purposes in the Dutch investment process.

• Legal Binding Status: Term sheets are mostly non-binding (except for confidentiality clauses), while investment agreements are fully binding legal contracts
• Detail Level: Term sheets provide a high-level outline of key terms, while investment agreements contain comprehensive legal provisions and exact wording
• Timing: Term sheets come first as negotiation tools, while investment agreements are the final step after due diligence
• Complexity: Term sheets are typically 5-10 pages of basic terms, while investment agreements can span 50+ pages with detailed clauses
• Purpose: Term sheets align parties' expectations early on, while investment agreements create enforceable legal obligations