Since you’re aiming for a crowdfunding launch, your Investment Terms (often called the “Term Sheet” or “Summary of Offering”) needs to be punchy, professional, and compliant. It bridges the gap between a marketing pitch and a legal operating agreement.
Here is a template you can adapt for your pitch deck or crowdfunding landing page.
Investment Terms Summary
Project Name: [Your Venture Name]
Offering Type: Preferred Equity (Series A)
Regulation: [e.g., Reg CF / Reg D 506(c)]
| Term | Detail |
|---|---|
| Target Raise | $[Amount, e.g., $1,500,000] |
| Minimum Investment | $[e.g., $1,000] |
| Preferred Return | [8-10]% Annual Cumulative Dividend |
| Payment Frequency | [e.g., Quarterly / Monthly] |
| Target Term | [e.g., 3–5 Years] |
| Asset Class | [e.g., Multi-family / Industrial / Mixed-use] |
The Capital Structure
- Priority of Payment: Preferred shareholders sit senior to the Sponsor’s common equity. You are paid first from operational cash flow and first upon a capital event (sale or refinance).
- Cumulative Distributions: If the property’s cash flow doesn’t cover the full dividend in a specific quarter, the unpaid portion “accrues” and must be paid in full before the Sponsor receives any profit.
- Equity Upside (Optional): [Include if applicable, e.g., “In addition to the 8% pref, investors receive 20% of the total profit upon sale.”]
Investor Rights & Governance
- Voting Power: Non-voting. Management retains 100% control over day-to-day operations and the timing of the sale.
- Information Rights: Investors will receive [Quarterly/Annual] financial reports and K-1 tax statements via the [Name of Platform] investor portal.
- Liquidity: This is a private placement and should be considered an illiquid investment for the duration of the hold period.
Use of Proceeds
- Acquisition: [X]% (Down payment on the property)
- Renovations/Capex: [X]% (Value-add improvements)
- Operating Reserves: [X]% (Safety net for the first 12 months)
- Platform/Legal Fees: [X]% (Costs of the crowdfunding raise)
A Tip for the “Pitch”:
Crowdfunding investors are often looking for “The Why.” In your preferred stock pitch, emphasize that they are getting a “Debt-like” steady check with “Equity-like” protection.
Example: “While common equity holders take the most risk for the highest reward, our Preferred Equity offering is designed for the investor who prioritizes consistent income and capital preservation.”
Would you like me to generate a “Risks and Disclosures” section to ensure you’re covering the legal bases for your investors?