When getting funding from family and friends, are term sheets necessary? The family member I've approached is more interested in becoming an investor, rather than owning convertible debt. Every term sheet I've come across has been for a round of financing, but are there any examples for just one investor?
Definitely put all agreements with anyone in writing and have these reviewed by your attorney and strongly recommend that any and all of your investors engage their own counsel to review the agreements.
These agreements need to cover a broad range of circumstances and topics - corporate governance, what happens if someone offers to buy some of your stock, how profits flow, etc.
Good agreements protect both you and your investors and in the case of family members, help ensure that you'll be able to eat Thanksgiving dinner together many years in the future.