Term sheet template for Singapore start-ups
Raising your first round in Singapore? FD AI asks plain-English questions and drafts a term sheet from Founders Doc's own master, a Singapore law practice for founders.
In FD AI: Choose Singapore as the law that applies.
What this term sheet covers
- What the deal is
- An investment, a loan, buying or selling a business, or a partnership, described in one sentence.
- Your side
- Tell FD AI which side you are on, and the usual answers lean your way.
- The key commercial terms
- Valuation, interest, price or revenue share, depending on the deal, plus any other terms you have agreed.
- Conditions and dates
- What must happen before the deal can close, and when you aim to sign and complete.
- What is binding
- Most of a term sheet is not binding. Exclusivity, confidentiality, costs, expiry and governing law usually are, and the term sheet says so clearly.
- Law and disputes
- The country's law you choose, with disputes going to the courts or to arbitration.
Singapore points to know
- Shareholders approve new shares
- Directors need the shareholders' prior approval in general meeting before issuing shares, whatever the constitution says. Shares issued without it are void.
- Filing with ACRA
- When a private company issues new shares it lodges a return of allotment with ACRA. The new shares take effect only once ACRA updates the electronic register of members.
- Offering shares to investors
- Most start-up rounds rely on an exemption from the prospectus rules, such as small offers (up to S$5 million in 12 months), private placements (up to 50 people in 12 months) or offers to accredited investors.
- Stamp duty
- New shares issued by the company are not charged stamp duty in the way that transfers of existing shares are.
- After the term sheet
- The deal is then set out in a share subscription agreement, often with a shareholders' agreement, board and shareholder resolutions and the ACRA filing.
Key terms in a Singapore start-up term sheet
- Valuation and amount
- The pre-money valuation, how much is being raised and the price per share, which together set each investor's percentage.
- Type of share
- Ordinary shares, or preference shares with extra rights. Preference share rights must be written into the constitution.
- Liquidation preference
- On a sale or winding up, preference shareholders are paid back first. A 1x non-participating preference is common in early rounds; higher multiples or participation favour the investor.
- Anti-dilution
- Protection if a later round is at a lower price. Broad-based weighted average is the usual start-up position; full ratchet is much tougher on founders.
- Board seats
- Whether the lead investor appoints a director or an observer, and how many seats the founders keep.
- Reserved matters
- Decisions that need investor consent, such as issuing new shares, changing the constitution, borrowing above a limit or selling the business.
- Founder vesting
- Founders earn their shares over time, often four years with a one-year cliff, so a founder who leaves early does not keep them all.
- Pre-emption and transfers
- Rights to take up new shares first, and first refusal, tag-along and drag-along when shares are sold.
How it works
- Answer a few questionsPlain English, one at a time. Skip anything you are unsure of.
- FD AI drafts your term sheetFrom Founders Doc's own lawyer-written wording, shaped around your answers.
- Check, edit and downloadChange any wording, ask FD AI to explain a clause, then download it as Word.
Common questions
Is a term sheet binding in Singapore?
Mostly not. The deal terms are usually subject to contract, but clauses such as confidentiality and exclusivity are normally binding. The term sheet should say clearly which is which.
SAFE, convertible loan or priced round?
A SAFE or convertible loan puts off agreeing a valuation and suits small early rounds. A priced round fixes the valuation now and suits larger rounds with a lead investor.
Do I need a prospectus to raise money?
Usually not for a start-up round, because most rely on an exemption such as small offers, private placements or offers to accredited investors. Check which applies before you approach investors.
How is a term sheet different from the investment agreement?
The term sheet is a short summary of what the parties intend to agree, and most of it is not binding. The investment agreement, usually a share subscription agreement with a shareholders' agreement, is the full binding contract, with warranties, conditions and completion steps.
What liquidation preference is usual?
In early Singapore rounds a 1x non-participating preference is common: investors take back what they put in, or share with everyone else if that pays more. Higher multiples or a participating preference favour the investor and are worth negotiating.
Is a term sheet legally binding?
Mostly not. The deal terms are usually only what the parties intend to agree. A few clauses, such as confidentiality, exclusivity and costs, are normally binding, and the term sheet should say which ones.
What comes after the term sheet?
The full agreements, such as a share subscription agreement and a shareholders' agreement for an investment. Some terms can still change while they are drafted.
How long should exclusivity last?
Long enough to finish due diligence and the documents, often 30 to 90 days. A long exclusivity period stops you talking to anyone else, so agree only what you need.
Can I edit the term sheet after FD AI drafts it?
Yes. Change any wording before you download it as a Word document, and ask FD AI to explain any clause.
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This page is general information, not legal advice. Every deal is different — for advice on your situation, talk to a Founders Doc lawyer.