The Founders Terms Sheet Generator is a tool developed by University of Missouri-Kansas City faculty and students. It is designed to assist founders of start-up companies in negotiating the internal business deal on the rights and obligations agreements among themselves and producing a draft “terms sheet” on which each founder can get legal advice from their attorney. Unlike a term sheet generator for a complex transaction involving venture capital investment, the target users are the original founders of a business that is not currently seeking, and in many cases my never seek outside investment in company equity. Nevertheless, the business issues to be negotiated can be unfamiliar and challenging, and this tool is designed to both educate company founders—especially first-time entrepreneurs—and help them navigate through the complexities and provide customization options.
The Founders Terms Sheet Generator addresses business “deal points” among the founders through an automated questionnaire built around the following key questions: Who is putting what into the company? Who gets to take what out of the company? How will company decisions be made, and who can sign contracts on behalf of the company? What can a founder do with their ownership Interest in the company? Under what circumstances might the company or the other founders buy back a founder's ownership interest? Each corresponding section has several sub-questions to facilitate a well-detailed agreement, along and helpful “pop up” definitions, and in some cases illustrative examples, to promote understanding and clarity.
Because is centered on internal business arrangements among founders that can apply to virtually any privately owned business. The Founders Terms Sheet Generator is useful before, and the help inform, “choice of entity analysis” that involves legal issues such as the type of company to form, the state law under which it will be formed, and its desired federal income tax status. Accordingly this tool is of wide application and is not “jurisdiction specific.”
The Founders Terms Sheet Generator is built on a platform provided pro bono by Neota Logic, an expert systems company. It can save entrepreneurs time and money (especially as compared to answering detailed questions by an attorney charging an hourly rate), and also be useful to lawyers in various practice settings. Through a project advanced by the Legal Technology Laboratory (now housed in the CLEI), it has been user tested by several entrepreneurship clinics at law schools from different parts of the country, and garnered positive feedback. The current project is focused on user testing with entrepreneurs in KC area start-up venture incubation/acceleration programs.
For more information on this project, contact Prof. Tony Luppino at
