Model Term Sheet
- Fundraising for startups in the Middle East and North Africa (MENA) is often time-consuming and costly. A critical part of the fundraising journey is the term sheet, of which there is no standard template in the region;
- The Saudi VCPE Association hopes to reduce transaction time and costs by providing series of model legal documents, which is inspired by the National Venture Capital Association (NVCA) in the United States, acts as a basis for fundraising negotiations, and includes the most important and commonly used terms applicable to several jurisdictions across MENA’s legislative environment;
12th December, 2021, Riyadh, Saudi Arabia – Today, the Saudi Venture Capital and Private Equity Association (VCPEA) supported by STV, the largest venture capital fund in MENA, announced the Model Term Sheet with the assistance of global law firm Latham & Watkins and Saudi law firm The Law Office of Salman M. Al-Sudairi. This Model Term Sheet, which is inspired by the NVCA in the United States, acts as a basis for fundraising negotiations, and includes the most important and commonly used terms applicable to several jurisdictions across MENA’s legislative environment.
Fundraising is often one of the most time-consuming and costly endeavors that entrepreneurs in MENA go through. According to a recent report by MAGNiTT, 43% of entrepreneurs in the MENA region list fundraising as one of their top 3 concerns. One critical part in this fundraising journey is the term sheet, which is a non-binding agreement that summarizes the terms and conditions of an investment.
In light of these challenges and in order to support regional fundraising efforts, STV developed the Model Term Sheet and open-sourced it to the Saudi VCPE Association, with the assistance of global law firm Latham & Watkins and The Law Office of Salman M. Al-Sudairi, for any entrepreneur in the MENA region to use.
Qusai A. AlSaif, CEO of the Saudi Venture Capital and Private Equity Association (VCPEA) commented: “We are delighted to announce the Model Term Sheet hoping that it will empower venture investors as they partner with entrepreneurs to build a better future for MENA. The Saudi VCPEA is working on an exciting project to standardize a series of documents to reduce transaction time and costs and fuel MENA growth in the VC investments. The Model Term Sheet project wouldn’t materialize without the great support from STV, Latham & Watkins and The Law Office of Salman M. Al-Sudairi.
Ahmad Alshammari, General Partner at STV, highlights, “Over the past few years, we have been fortunate enough to work with many world-class entrepreneurs. However, while we deal with term sheets on a day-to-day basis, entrepreneurs are often new to the whole fundraising exercise. The fact that there are no standard terms does not help.”
Eyad Latif, Counsel in Latham & Watkins’ Dubai office, commented, “The startup ecosystem in MENA has enjoyed phenomenal growth in recent years and now stands at a critical juncture in its development. This new, open-sourced Model Term Sheet will provide entrepreneurs and investors with a consistent set of rules that are in line with prevailing international standard market practice for venture capital financings, and it will play an important role in the continued expansion of the venture-backed high growth tech company market in the region.”
Salman Al-Sudairi, Principal of The Law Office of Salman M. Al-Sudairi and Latham partner, commented, “The new Model Term Sheet is a significant milestone in the development of the regional market and will be a great value add for all parties in venture capital-related transactions.”
Alshammari concludes, “Of course, in true open-source fashion, we encourage founders to modify, add, and remove terms based on their situation and preferences, but we believe that this is a great starting point for any fundraising exercise in the region. A template of the term sheet can be downloaded for free in PDF and Word format.”
About Saudi VCPE Association
The Saudi Venture Capital and Private Equity Association is a professional industry body representing the Kingdom’s venture capital and private equity investors. With a mission to advocate for best-in-class public policy, endorsing the highest professional and ethical standards. Aiming to increase the sector contribution to the growing Saudi economy, while also providing key industry data, research and periodic publications. In addition to organizing industry-related conferences, workshops and trainings and offering consultancy services. The Association further strives to promote the development of the industry and its professionals as well as facilitate interaction and collaboration among all members. For more information about Saudi VCPE Association, please visit https://vcpea.org.sa/
STV is the largest independent technology venture capital fund in MENA. With over $500 million in capital, STV backs and scales the region’s most exciting and disruptive technology companies. STV began operations in early 2018 and has offices in Riyadh and Dubai. https://stv.vc/
About Latham & Watkins
Latham & Watkins delivers innovative solutions to complex legal and business challenges around the world. From a global platform, our lawyers advise clients on market-shaping transactions, high-stakes litigation and trials, and sophisticated regulatory matters.
Latham combines an unrivaled global platform with deep tech experience — serving clients from Silicon Valley to Hong Kong, garages to boardrooms, scaling to meet each client’s unique needs and ambitions. We understand the tech sector’s evolving complexities and opportunities, which allows us to deftly guide clients through legal and commercial challenges on the path to achieving their goals. We advise startups, tech giants, traditional businesses transforming through technology, and the investment banks, venture capital firms, and private equity sponsors that serve them. We draw on our widely recognized market-leading capabilities in key areas, including venture capital, capital markets, M&A, data privacy and security, IP litigation, and public company representation to help clients deliver on their vision.
Latham is one of the world’s largest providers of pro bono services, steadfastly supports initiatives designed to advance diversity within the firm and the legal profession, and is committed to exploring and promoting environmental sustainability. www.lw.com
About The Law Office of Salman M. Al-Sudairi
The Law Office of Salman M. Al-Sudairi was founded in 2012 and has since earned considerable market recognition as one of the top law firms in the Kingdom of Saudi Arabia for Corporate and Mergers & Acquisitions, Capital Markets and Banking & Finance.
The Law Office of Salman M. Al-Sudairi provides fully integrated legal services with respect to the laws and regulatory framework of the Kingdom of Saudi Arabia, and is able to provide legal advice under Saudi, English and US law. We understand the history and culture of the country, and the unique nuances of doing business in the Kingdom of Saudi Arabia. The office is staffed with Arabic and English-speaking lawyers drawn from various national backgrounds, who are known for solving problems in a commercial and practical manner while adding genuine value for clients.
Get it for free in PDF and Word format.
Disclaimer: the document is intended to serve as a starting point only, and should be tailored to meet a specific requirement. The document should not be construed as legal advice for any particular facts or circumstances.