SAFE & Note Term Sheet Template, Word and PDF

A term sheet records the principal commercial terms of a proposed investment: how much money goes in, what it buys, and what a later conversion into shares depends on. It is not the investment itself. The binding instrument, the SAFE or the convertible note, is signed afterwards, once diligence and the definitive documentation are done.

The choice between the two instruments drives everything below it. A SAFE is not debt: it carries no interest and no maturity date, and gives the investor shares when the company next raises an equity round, or a payout of equivalent value if it is sold first. A convertible note is an unsecured loan that bears interest and falls due on a maturity date, converting into shares if a qualifying round happens first. Both use a valuation cap and a conversion discount to reward the early investor for backing the company before it has a price. The definitive convertible loan and SAFE agreement for Singapore startups is what this offer leads into once both sides agree.

Singapore does not regulate SAFEs or convertible notes as a special category; three regimes shape them. The first is the Securities and Futures Act 2001, which treats a convertible instrument as an offer of securities and, by default, requires a prospectus lodged with the Monetary Authority of Singapore. Early rounds almost never lodge one; they rely on an exemption. The small offers exemption covers modest raises below a statutory ceiling over any twelve months, the private placement exemption covers offers to no more than fifty persons in a year, and a further route covers offers made only to accredited or institutional investors. The exemptions are set out in the Securities and Futures Act 2001 on Singapore Statutes Online. Structure the raise so it sits squarely inside one exemption; drift past the headcount or the ceiling and the prospectus obligation revives.

The second regime is the Companies Act 1967. When the instrument converts, the company issues new shares, and its directors need authority to allot them, usually a shareholders' resolution under section 161 plus any pre-emption waiver the constitution demands. The offer flags this as a condition so the conversion is not stranded later. The third point is contract law: Singapore courts read a term sheet as subject to contract, so the commercial paragraphs bind no one until the definitive agreement is signed, while a short list of clauses, exclusivity, confidentiality, costs, governing law and expiry, is written to bind immediately. Getting that binding boundary right is the most important drafting decision in the document.

The commonest trigger is the first real cheque. A founder promised money by an angel or a micro-VC needs something concrete to move from conversation to commitment, and a term sheet does that without full documentation up front. Accelerator and pre-seed rounds run the same way: the lead investor issues terms, the founder counter-signs, and the SAFE or note follows. Bridge rounds are another classic, where existing investors top a company up on convertible terms.

It also earns its place whenever several investors come in on the same terms, because circulating one clean offer keeps every party on the same valuation cap and discount instead of negotiating each cheque separately. Founders still sorting out equity between themselves usually settle the founders' agreement between co-founders first, then use this document to bring outside money in. If an investor asks for a board seat or warranties now, the deal has outgrown a simple convertible.

The template runs from a short summary of terms to the signature block, and adapts as you answer. The clauses that carry the weight are these:

• The instrument choice sits at the top and reshapes the rest of the document. Pick a SAFE and the interest and maturity sections disappear; pick a convertible note and they appear.
• The investment amount and valuation cap fix how much goes in and the ceiling valuation at which it converts, so a later up-round does not erode the investor's entry price.
• The conversion discount gives the investor a percentage reduction on the price the next round's investors pay, and the document applies whichever of the cap or the discount yields the better price.
• The interest and maturity clauses, present only for a note, set a simple annual rate and the date by which the note converts or is repaid, with accrued interest rolling into the conversion rather than paid in cash.
• The conversion clause defines the qualifying financing that triggers automatic conversion, and handles a trade sale or a winding up before conversion.
• The optional pro-rata and most-favoured-nation rights let the investor keep its percentage in later rounds and pick up better terms granted to a later convertible holder.
• The binding exclusivity, confidentiality and expiry clauses stop the company shopping the deal, protect each side's information, and lapse the offer if it is not signed in time.

This pairs naturally with a shareholders' agreement for a Singapore company when the round ends in a governance arrangement.

The instrument you pick changes the risk on both sides. A SAFE keeps things simple: no interest to track and no maturity date to miss, so nothing forces a conversion or a repayment if the next round is slow to arrive. That simplicity is why the SAFE has spread through Singapore's seed stage. The trade-off is that a pure SAFE gives the investor no scheduled way to recover the money if the company simply drifts.

A convertible note answers that by being debt. It accrues interest, usually at a modest simple rate, and carries a maturity date. If no qualifying round happens before that date, the investor can demand repayment or convert on the spot, which is real leverage a SAFE lacks. The note also ranks ahead of shareholders on a winding up, a meaningful difference if the company fails. Lending to a company also sits near the Moneylenders Act 2008, but that Act excludes anyone who lends only to corporations, so a convertible note into a Singapore company stays outside its licensing regime.

Between the two, the valuation cap and the discount behave identically, so the negotiation turns on interest, maturity and the downside. A founder confident of raising soon leans toward the SAFE; an investor who wants a floor leans toward the note. This document writes either cleanly, so you can send the same offer both ways.

You start by naming the company and the investor, then choose the instrument, and the form adjusts at once. Select the SAFE and the interest rate and maturity date fields drop away; select the convertible note and they appear, because those terms only make sense for debt. From there you enter the investment amount, the valuation cap and the conversion discount, and set the qualifying financing threshold. Two switches add pro-rata rights and a most-favoured-nation clause if the investor asked for them, and a final step sets the exclusivity period and the expiry date.

The preview updates beside the form as you answer, and the section numbering re-flows when the note-only or optional clauses come in and out, so what you read is always the exact offer you will sign. When it is done, download it, sign it, and circulate it. The same guided wizard powers the full catalogue of Singapore legal documents, so you can move straight to the definitive instrument.

The most common error is misreading what binds. Founders sometimes celebrate a signed term sheet as a closed deal and stop talking to other investors, when only a short administrative set of clauses, exclusivity, confidentiality, costs, governing law and expiry, actually binds; the money is not committed until the definitive instrument is signed. The mirror mistake is an investor treating the commercial terms as final and skipping the diligence the document makes a condition.

The next trap is the exemption. A raise that slips past the private placement headcount, or past the small offers ceiling, loses its prospectus exemption under the Securities and Futures Act 2001, and the fallout is regulatory, not merely contractual. Founders also forget the conversion plumbing: without the section 161 allotment authority in place, a note that matures cannot be turned into shares. Leaving the valuation cap and the discount half-understood invites an argument at conversion about which applies, and leaving out an expiry date lets a stale offer hang over the company for months. Businesses that run their fundraising on proper paper, from this offer through to the rest of their company and business templates for Singapore, spend their energy building rather than renegotiating.