Entrepreneurial Finance and Private Equity

Class #7 – Tuesday, November 5, 2002

Term Sheets

 

Case:    SecureNet:  Series A Round

 

Optional Reading:  “Understanding Term Sheets,” Aspatore Publishing

 

Network File:   SecureNet (A).xls

 

Guest Speaker:  Professor April Triantis, UVA Law School

 

  1. What is the post-money value and per-share price of SecureNet prior to the Series A round?  After the Series A round - if the offer is accepted as proposed?

 

  1. What are the implications to Trio if another investor offers to provide SecureNet an additional $3 million in equity after the Series A round at a price of $8 per share?  At $1 per share?

 

  1. What incentives are built into the Series A round to motivate Goodson?  Are they sufficient incentives in your opinion?

 

  1. Based on the term sheet for the Series A round, would you say it generally favors the Entrepreneur of the Angel Investor?  Be sure to cite specific terms and features of the contract to support your opinion.

 

  1. Is the $1.4 million offer from Trio, LLC an adequate price for a 40% stake in SecureNet?

 

  1. If you were Mr. Goodson, would you reject the offer and seek out a more experienced venture capitalist, accept Trio’s offer as proposed, or attempt to negotiate certain terms of the offer?  If you choose to negotiate, what adjustments would you seek to make?