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Startup & Investor

Investor Letter / Term Sheet

An Investor Letter or Term Sheet outlines the key terms of an investment proposal. Covers valuation, investment amount, equity offered, and investor rights — a starting point for funding negotiations.

This template is a professionally drafted legal document. It does not constitute legal advice. LegalEase accepts no liability beyond the cost of the document purchased. For complex transactions, we recommend review by a qualified legal practitioner.
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What this document covers

Investor and company details
Pre-money valuation
Investment amount and equity offered
Type of security (ordinary shares, preference shares, convertible note)
Key investor rights (board seat, information rights, anti-dilution)
Conditions precedent to closing
Exclusivity period
Binding vs. non-binding provisions

Frequently Asked Questions

Is an investor letter or term sheet legally binding in Kenya?
Most term sheets are non-binding (except for specific clauses like exclusivity and confidentiality). However, if a term sheet is signed and contains all the essential elements of a contract, a Kenyan court may treat it as binding. The document should clearly state which provisions are binding and which are not.
What key terms should an investor letter include?
Pre-money valuation, investment amount, equity percentage, type of security (ordinary shares, preference shares, convertible note), investor rights (board seat, information rights, anti-dilution), and conditions precedent to the investment closing.
What investor protections are common in Kenyan startup funding rounds?
Preference shares with liquidation preference, anti-dilution protection (broad-based weighted average is most common), pro-rata rights in future rounds, information rights (quarterly management accounts), and a board seat or observer right for lead investors.