Convertible Note Term Sheet by Cofounders
The Convertible Note Term Sheet outlines the key economic and structural terms for a proposed convertible note financing, including investment amount, interest, maturity, valuation cap, discount, conversion mechanics, and treatment upon sale of the company. It serves as a non-binding summary to guide negotiation prior to drafting the formal Convertible Note Purchase Agreement, and reflects standard early-stage financing practices commonly used in Singapore startup fundraising.
Convertible Note Term Sheet
The following is a summary of the basic terms and conditions of a proposed convertible promissory note financing of [company name], [company registration number], with registered address at [company address]. This term sheet is for discussion purposes only and is not binding on Company or the Investors (as defined below).
This is a preview. The full template is free on GitLaw.
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About this template
What is this template?
This is a non-binding summary of basic terms for a proposed investment rather than a definitive legal agreement. It contains specific financial triggers including a $1,000,000 SGD Qualified Financing threshold and a 5% annual interest rate. It is not a Note Purchase Agreement or the Note itself.
When should you use it?
Use this document to align on economic terms with investors before drafting the definitive Note Purchase Agreement. If the investment is for straight equity without a debt component, use a Subscription Agreement Term Sheet instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| Financing Amount | Financing Amount | The Company proposes to issue up to $1000000 SGD worth of convertible promissory notes to one or more purchasers. |
| Maturity Date | Maturity Date | Principal and unpaid interest become due and payable twenty-four (24) months from the date of the Note Purchase Agreement. |
| Interest | Interest | Interest accrues on an annual basis at the rate of 5% per annum based on a 365 day year. |
| Conversion Price | Conversion Price | Conversion occurs at the lesser of 75% of the Qualified Financing share price or the $3500000 SGD Valuation Cap. |
| Automatic Conversion | Automatic Conversion | Notes convert automatically upon a Qualified Financing or at the Maturity Date if no financing has occurred. |
| Sale of the Company | Sale of the Company | Investors may choose a 1.5x payout or conversion at the Valuation Cap if the Company is sold before a Qualified Financing. |
Who it's for
- a Singapore-based startup seeking bridge or seed financing through debt that converts to equity
- an early-stage company setting a $3,500,000 SGD valuation cap for future investment rounds
- founders negotiating with investors for an unsecured $1,000,000 SGD convertible loan
How long it runs and how it's signed
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