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Archimedes.Studio Standard Acceleration Term Sheet

Permanent Acceleration Agreement
Plain English Term Sheet prepared by Keith Teare. All numbers in this template are for illustration only. Actual numbers would be specific to each partnership.

Summary:
Archimedes Accelerator LLC, led by Keith Teare, provides a free permanent acceleration service to emerging companies in return for an investment agreement. This requires two agreements. Firstly a services agreement, with the service provided for free. Secondly an agreement to invest.

This service agreement focuses on preparing a team for fundraising and is referred to below as “raise readiness”. The investment agreement constitutes a warrant for the purchase of an agreed % of the company at a fixed price and an exercise that “reverse vests” where payment is made using a promissory note backed by the shares themselves.

The services program is very similar to a regular acceleration program with some important differences.
There is no time frame. Unlike a normal acceleration that lasts 3 months, this program is continuous over several rounds of financing.
There is no cash investment and associated ownership upfront. A typical accelerator will place between $20,000 and $150,000 for between 7% and 10% ownership. This ownership is locked in on day 1 and cannot be reversed. Archimedes earns no stock or cash reward directly for its service component.
The traditional accelerator focuses on “growth hacking” and “traction”. to achieve a single short-term outcome. Archimedes focuses on the founders and the team and seeks to prepare them to raise funds consistently over the next several years. This is done by focusing on the business plan, associated model, and story.

Below is a plain English version of the typical terms.

The Services Agreement

[Company Name
]
and any of its affiliated entities (The Company) will work with
[Keith Teare]
of Archimedes Accelerator LLC (Archimedes) to prepare the company to be ready to raise funds. the goal will be to raise at least [
$10m
]
over one or more funding rounds. A successful end result will be a funded company

The Investment Agreement

Archimedes will have the right to purchase
[10%
] of the company at the current common stock valuation. This right will be enshrined in a Warrant. Archimedes will pay $1 for the Warrant and will exercise the warrant on the close of this agreement and so take ownership of the stock via a “reverse vesting” style. In short the stock will belong to Archimedes and will be paid for via a promissory note as a full-recourse note, guaranteed by the stock.

If the services agreement is fulfilled Archimedes will pay for the stock indicated in the investment agreement and the promissory note will be revoked. Should the services agreement not be achieved the company can buy back the Warrant for $1 and retrieve the stock by triggering the promissory note. In that event Archimedes will have received zero reward for its work.

Under the reverse vesting procedure Archimedes will not be able to transact in any shares unless the cancellation of the promissory note is triggered as described below.

10%
represents the fraction of today’s company Archimedes will own. It will be measured in a fixed number of shares that Archimedes can purchase on the signing of this agreement. As the company raises capital over time the number of shares will remain the same, and so the shares will represent diluted percent ownership. For example, if the dilution to raise
[$10m
] is 50% then Archimedes will be diluted by 50% along with all other shareholders.

Nature of the agreement
This is an agreement for Archimedes Accelerator LLC to provide
funding-readiness
services to [Company Name] and associated entities. These services will have the goal of preparing the founding team, led by
[Team Lead for the Company]
(The Team), to successfully raise capital to build the [Description of the Products/Services]. The success of the effort will be measured in funds raised over several funding rounds. The services will be provided for free.

Specific Terms
The service will commence in [Month/Year] and have no defined end date. The initial effort will be to develop a Company Strategy (deck and narrative) and Business Plan (numbers) with Archimedes playing the role of mentor/tutor to the team. This strategy and plan will form the basis for investor pitches. Archimedes will not be an executive of the company, nor will he be present when pitches occur. [Keith Teare] will remain in the background and be presented as running an accelerator program for the Company. His key relationship will be via
the team lead
and to his team. Because the services are provided free of charge Archimedes will not be paid in for its time, but may, with consent, be repaid expenses should they occur.

The goal of the Company and the Provider will be to raise [Amount, eg
$10 million]
in one or more tranches of financing. Insofar as the goal is successful Archimedes will earn the right to own the shares subject to the promissory note, via the cancellation of the note.

The investment agreement will vest over time based on the success of the services agreement.

in the following proportions:

1
Cumulative Money Raised (example)
% of Archimedes shares
Total Shares Available for Exercise
2
$>$0 but <3m
10%
TBD based on cap table
3
$3m - $7.5
25%
TBD based on cap table
4
>$7.5m-$10m
50%
TBD based on cap table
5
>=$10m
100%
TBD based on cap table
There are no rows in this table

Acquisition

If the Company changes ownership or is subject to an asset sale or acquihire during this agreement Archimedes will be able to acquire the shares according to the following Schedule:

1
Acquisition price
% of 10% earned
Total Shares available for exercise
2
<$10m
10%
TBD based on cap table
3
$10m - <$20m
25%
TBD based on cap table
4
$20m - <$30m
50%
TBD based on cap table
5
$30m plus
100%
TBD based on cap table
There are no rows in this table

The Number of Shares Archimedes can purchase is
[ ]
and the current price per common share is [ ], so Archimedes’ exercise price for 10% of the Company will be
[ ]
. This will be paid to the Company using the promissory note when the Warrant underlying these shares is exercised at the close of this agreement.

Once vested Archimedes can purchase the shares referenced in the promissory note in the proportion they have been vested. Payment can be in cash or via a “cashless exercise”. On payment that portion of the promissory note will be cancelled.


Agreed as a plain English fair record of our agreement:


Keith Teare (for Archimedes Accelerator LLC)
[Signature]
Date:

[Founder]
[Signature]
Date:

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