Startup Investment Term Sheet for Singapore

Startup Investment Term Sheet Template for Singapore

A Startup Investment Term Sheet under Singapore law is a non-binding document that outlines the key terms and conditions of a proposed investment in a startup company. It serves as a foundation for the subsequent detailed investment agreements and typically includes provisions regarding valuation, investment amount, share class rights, governance structure, and investor protections. The document follows Singapore's legal framework, particularly the Companies Act and Securities and Futures Act, and incorporates standard market practices in the Singapore startup ecosystem.

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What is a Startup Investment Term Sheet?

A Startup Investment Term Sheet is typically used during the early stages of investment negotiations between startups and potential investors in Singapore. The document serves as a roadmap for the eventual detailed investment agreements, capturing essential terms such as valuation, investment structure, and key rights. While generally non-binding (except for specific provisions like exclusivity and confidentiality), it reflects the parties' serious intent to proceed with the investment. The term sheet must comply with Singapore's regulatory framework, including the Companies Act and Securities and Futures Act, while following established market practices in Singapore's vibrant startup ecosystem.

What sections should be included in a Startup Investment Term Sheet?

1. 1. Parties: Identification of the investor(s) and the company/founders

2. 2. Background: Brief description of the company and purpose of investment

3. 3. Definitions: Key terms used throughout the term sheet

4. 4. Investment Terms: Amount, valuation, and type of securities being issued

5. 5. Pre-Money Valuation: Agreed company valuation before investment

6. 6. Capitalization Table: Overview of shareholding pre and post-investment

7. 7. Board Composition: Structure and voting rights of the board

What sections are optional to include in a Startup Investment Term Sheet?

1. Anti-Dilution Protection: Protection mechanisms against future down rounds, typically included when investors require safeguards against dilutive financing rounds

2. Liquidation Preference: Terms specifying priority and multiplier on exit proceeds, typically included for preferred share investments

3. Founder Vesting: Vesting schedule and terms for founder shares, included when founders' continued involvement needs to be secured

4. ESOP Pool: Employee stock option pool provisions and size, included when company plans to implement employee share schemes

What schedules should be included in a Startup Investment Term Sheet?

1. Schedule 1 - Cap Table: Detailed breakdown of pre and post-investment shareholding structure

2. Schedule 2 - Key Terms Definition: Detailed definitions of technical and financial terms used in the term sheet

3. Schedule 3 - Conditions Precedent: Comprehensive list of conditions to be met before investment completion

4. Schedule 4 - Corporate Information: Company registration details, current directors, and other relevant corporate information

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Cost

Free to use

Relevant legal definitions

Clauses

Relevant Industries

Technology
Fintech
Biotech
E-commerce
Clean Technology

Relevant Teams

Legal
Finance
Corporate Development
Executive Management
Compliance

Relevant Roles

Chief Executive Officer
Chief Financial Officer
Investment Manager
Venture Capital Partner
Company Secretary
General Counsel
Corporate Lawyer

Industries

Companies Act (Cap. 50): Primary legislation governing company formation, management, and operations in Singapore. Critical for share issuance, shareholders' rights, and corporate governance provisions in the term sheet.

Securities and Futures Act (Cap. 289): Regulates securities offerings and investment products. Relevant for structuring investment terms and ensuring compliance with securities regulations.

Contract Law: Common law principles governing contract formation and enforcement in Singapore. Ensures term sheet is legally binding and enforceable.

MAS Guidelines: Monetary Authority of Singapore guidelines on investment products and services. Ensures compliance with regulatory requirements for investments.

Foreign Investment Regulations: Rules governing foreign investments in Singapore companies. Important for international investors and cross-border considerations.

Start-Up SG Regulations: Government initiatives and regulations specific to startups in Singapore. May affect investment terms and available incentives.

Corporate Governance Code: Guidelines for corporate governance practices. Relevant for board composition and management provisions.

Directors' Duties: Legal obligations of company directors under the Companies Act. Important for management and control provisions.

Income Tax Act: Tax legislation affecting investment structures and returns. Crucial for tax-efficient investment planning.

Stamp Duties Act: Regulations on stamp duties for share transfers and agreements. Affects transaction costs and documentation requirements.

Employment Act: Labor laws relevant if term sheet includes founder employment terms or employee stock options.

Central Provident Fund Act: mandatory social security savings scheme. Relevant for employment-related provisions.

Patents Act: Protection of inventions and technological innovations. Important for IP rights provisions in technology startups.

Trade Marks Act: Protection of brands and logos. Relevant for IP ownership and transfer provisions.

Personal Data Protection Act: Regulations on handling personal data. Important for data privacy and protection provisions.

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What is a Startup Investment Term Sheet?

What sections should be included in a Startup Investment Term Sheet?

What sections are optional to include in a Startup Investment Term Sheet?

What schedules should be included in a Startup Investment Term Sheet?

Authors

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