Document background
The Convertible Equity Term Sheet is a critical document in the Indian startup and investment ecosystem, typically used during early-stage funding rounds where company valuation may be challenging to determine. It provides a structured framework for negotiations between companies and potential investors, outlining the fundamental terms of a proposed investment while complying with Indian corporate law and SEBI regulations. This document is particularly valuable in bridge rounds or when parties prefer to defer valuation discussions to a future funding round. The term sheet serves as a roadmap for the preparation of definitive agreements, capturing key commercial terms such as investment amount, valuation caps, conversion mechanisms, and investor rights, while ensuring alignment with Indian regulatory requirements including foreign investment regulations where applicable.
