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Funding Term Sheet Template for Germany

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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 Berlin-based healthcare software company, with a lead investor and two co-investors, including standard anti-dilution and board representation provisions under German law."

Document background
The Funding Term Sheet serves as an essential preliminary document in German investment transactions, outlining the fundamental terms and conditions of a proposed investment. It is typically used during the early stages of investment negotiations, after initial interest has been established but before detailed due diligence and final documentation. The document includes crucial information such as investment amount, valuation, governance rights, and key protection provisions, all structured in compliance with German legal requirements. While most provisions in a Funding Term Sheet are non-binding, it serves as a crucial roadmap for attorneys drafting the final investment agreements and helps ensure all parties have a clear understanding of the proposed transaction terms. The document must align with German corporate law requirements, particularly considering the specific regulations for GmbH (limited liability companies) or AG (stock corporations) structures.
Suggested Sections

1. Parties: Identification of the company receiving funding and the investor(s)

2. Background: Brief context of the company, purpose of the investment, and current capitalization

3. Definitions: Key terms used throughout the term sheet

4. Investment Terms: Amount of investment, type of securities, price per share, and pre-money valuation

5. Company Capitalization: Pre and post-money cap table, showing ownership structure

6. Investor Rights: Basic rights attached to the investment including voting, anti-dilution, and information rights

7. Board Composition: Structure and composition of the board post-investment

8. Transfer Restrictions: Limitations on transfer of shares and right of first refusal

9. Closing Conditions: Key conditions that must be met before the investment is completed

10. Timeline: Expected dates for due diligence, documentation, and closing

11. Confidentiality: Confidentiality obligations regarding the term sheet and negotiations

12. Binding Terms: Specification of which terms are binding and non-binding

Optional Sections

1. Liquidation Preference: Terms defining investor priority in liquidation events - used for preferred share investments

2. Conversion Rights: Terms for converting preferred shares to common shares - included for convertible preferred stock investments

3. Anti-dilution Protection: Detailed provisions protecting against dilution - used in more sophisticated investment rounds

4. Participation Rights: Terms for participation in future funding rounds - included for larger or lead investors

5. Tag-Along Rights: Co-sale rights for investors - typically included for minority investor protection

6. Drag-Along Rights: Forced sale provisions - included when majority stakeholders want exit flexibility

7. Dividend Rights: Terms for dividend payments - included if relevant to investment structure

8. Registration Rights: Rights related to future public offerings - included for later-stage investments

9. Employee Stock Option Pool: Terms for employee equity incentives - included if ESOP is part of the deal

10. Key Person Provisions: Terms related to key employee retention - included for founder-dependent businesses

Suggested Schedules

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

2. Key Financial Terms Summary: Summary table of main financial terms and calculations

3. Use of Proceeds: Breakdown of how investment funds will be used

4. Key Milestones: Timeline of expected business and investment milestones

5. Due Diligence Checklist: List of required due diligence items

6. Corporate Information: Summary of key corporate and legal information

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºìÐÓÖ±²¥ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions










































Clauses






























Relevant Industries

Technology

Healthcare

Biotechnology

Financial Services

E-commerce

Manufacturing

Clean Energy

Software

Real Estate

Consumer Goods

Media and Entertainment

Telecommunications

Educational Technology

Industrial Technology

Digital Infrastructure

Relevant Teams

Legal

Finance

Corporate Development

Investment

Strategy

Executive Leadership

Business Development

Compliance

Due Diligence

Corporate Governance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Investment Manager

Legal Counsel

Corporate Development Director

Venture Capital Partner

Private Equity Director

Investment Banker

Corporate Attorney

Finance Director

Business Development Manager

Strategy Director

Board Member

Company Secretary

Financial Controller

Investment Analyst

Due Diligence Manager

Industries










Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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