The Capital Education Programme helps businesses understand the capital-raising process in NZ.
Key points for term sheets:
-Describe the nature of the investment.
-Outline the price of a share and whether investors are paying up front or in tranches.
-Are not legally binding, and are conditional on entry into formal legal subscription or shareholder agreements.
-Should clarify what terms are binding and what terms are not.
-It's helpful to define shareholder terms to avoid issues further down the line.
Some other items an investor will want to include are:
-Key performance milestones (they may also choose to make tranche payments against meeting these).
-Founder commitments, for example, staying in the role for a minimum period.
You can find out more about Capital Education on the Callaghan Innovation website:
https://www.callaghaninnovation.govt.nz/innovation-skills/capital-education
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