Reading: Term Sheets — English for Startup Engineers

Term Sheet — Series A Preferred Stock (excerpt)

Pre-Money Valuation: $18,000,000. Amount Raised: $6,000,000, resulting in a post-money valuation of $24,000,000 and an investor ownership stake of approximately 25% on a fully diluted basis.

Liquidation Preference: 1x non-participating. In the event of a liquidation event, Investors are entitled to receive the greater of (a) their original investment amount or (b) the amount they would receive on an as-converted basis, before any distribution to holders of Common Stock.

Pro-Rata Rights: Investors will have the right, but not the obligation, to participate in future financing rounds in order to maintain their percentage ownership.

Option Pool: An option pool representing 10% of the post-money fully diluted capitalization will be created prior to the closing of this financing, diluting existing shareholders rather than the new investors.