The Mechanics of (Pre) Seed Stage Finance

Often startups and early stage companies capitalize their business by issuing equity to outside investors.

The initial round of investment is often called a seed round. Depending on the stage of the company and the amount of capital raised, the investment may be structured in a variety of ways and investors may range from friends and family to large institutional investors. The terms of the investment are often proposed in a short and non-binding document called a “Term Sheet.” For many, the concepts in the Term Sheet are new or misunderstood but can have a lasting impact on the business.