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
- 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?
- 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?
- What
incentives are built into the Series A round to motivate Goodson? Are they sufficient incentives in your
opinion?
- 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.
- Is
the $1.4 million offer from Trio, LLC an adequate price for a 40% stake in
SecureNet?
- 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?