Berkonomics

JULY 23, 2020

Especially when outside investors, venture capitalists, or angels, have put in substantial money and the sales price is less than the value of their investment. Directors can be held liable under certain circumstances for favoring the interests of preferred shareholders over common stockholders.

Delaware 62

Delaware Liquidation Preference Preferred Stock Early Stage 62

Both Sides of the Table

APRIL 14, 2010

That means that the likely have a minimum of $15 million in liquidation preferences. It will usually be higher because the liquidation preference has a dividend so if the deal is long in the tooth assume that the liquidation preference might be $20-22 million. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Startup Professionals Musings

SEPTEMBER 14, 2010

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Liquidation preference.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Up and Running

AUGUST 17, 2015

C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). The fundraising process may start with friends and family, but may quickly shift to a bank loan, individual angel investors, or at a later stage, venture capital or private equity.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Startup Professionals Musings

FEBRUARY 3, 2018

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. Finally, entrepreneurs should never forget that investors really believe that they are there to help (not like “I'm from the IRS and I'm here to help”).

Term Sheet 140

Term Sheet Advisory Board Liquidation Preference Portfolio 140

Startup Professionals Musings

JULY 3, 2014

As an Angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and then disappear into the sunset. Finally, entrepreneurs should never forget that investors really believe that they are there to help (not like “I''m from the IRS and I''m here to help”).

Term Sheet 237

Term Sheet Advisory Board Liquidation Preference Startup 237

Gust

OCTOBER 17, 2011

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Liquidation preference.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Startup Professionals Musings

AUGUST 16, 2015

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. Finally, entrepreneurs should never forget that investors really believe that they are there to help (not like “I'm from the IRS and I'm here to help”).

Term Sheet 120

Term Sheet Advisory Board Liquidation Preference Angel Investor 120

Feld Thoughts

JUNE 2, 2015

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

Both Sides of the Table

JANUARY 21, 2010

They get together with a few buddies, bounce around ideas, build some code (sometimes internally, sometimes through contractors), start talking to potential angel investors and then register their company. You need to know how liquidations preferences work. Many people start companies arse backwards.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Startup Company Lawyer

MARCH 14, 2010

Certain angel investors refuse to do convertible debt deals, but will be okay if there is a price cap. The primary rights in these documents, ranked in order of importance in my opinion are: Non-participating preferred liquidation preference. Dividend preference. Liquidation preference.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Berkonomics

MAY 22, 2014

I am an angel investor, that is, an accredited investor who is assumed by the SEC and others to be sufficiently wealthy to afford to lose the investment and supposedly experienced enough to make good choices on fundable companies. I don’t fund new companies that have prepared PPMs for investment. Sounds simple, huh?

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

Growthink Blog

MAY 23, 2011

Through connections, or through a chance meeting at a networking or social event, an angel investor hears the entrepreneur's story, likes them and their technology, and on the spot, writes a check to provide the company with its first outside financing. Venture capitalists Have Very Different Objectives than Angel Investors.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. « Power of Angel Investing in Milwaukee | Main.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react.   First , dividends.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Professor VC

APRIL 1, 2010

I had a discussi on with another angel investor a few months ago and he was bragging about the deal he just struck that included a 3X participating liquidation preference. This will both reduce the number of angel investors and make it more difficult to syndicate across stage lines. Steve Bennet.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

Up and Running

MAY 21, 2015

When small business owners talk about taking on an additional investor, they typically say something nondescript like, “We’re taking on an angel investor.” What they don’t discuss are the many of ways in which that investor can actually invest. Liquidation preference. Structure of the investment.

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

Berkonomics

AUGUST 29, 2013

Especially when outside investors, venture capitalists, or angels, have put in substantial money and the sales price is less than the value of their investment. Directors can be held liable under certain circumstances for favoring the interests of preferred shareholders over common stockholders.

Delaware 66

Delaware Liquidation Preference Liquidity Event Preferred Stock 66

VC Adventure

AUGUST 30, 2010

Paul himself said in a March 2009 article : “When you hear people talking about a successful angel investor, they’re not saying "He got a 4x liquidation preference." Now on to by far the more important question – Is this trend a good one for entrepreneurs and investors? Has Convertible Debt Won?

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

SoCal CTO

JULY 13, 2010

How-to learn about angel/vc term sheets - Gabriel Weinberg , June 28, 2010 I think every startup entrepreneur (and angel investor) should have a good understanding of financing term sheets. liquidation preference. It sounds like Angel Boot Camp rocked. Yes, even bootstrappers. Delegate and automate.

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

The Startup Lawyer

JANUARY 10, 2011

Terms like the option pool , liquidation preference , and board composition are just a few other investment terms that have a meaningful impact on your startup.

Term Sheet 64

Term Sheet Pre-Money Valuation Liquidation Preference Option Pool 64

Professor VC

JULY 25, 2013

In investment parlance, it strictly means that new classes of stock have equal rights with prior classes in terms of liquidation preference, voting rights, etc. I was working closely with an entrepreneur and introduced another angel investor to the company. Seems like my rant is picking up steam now.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

aweissman.com

JUNE 5, 2011

Angel investors, seed investors, micro- VCs , angel lists, secondary markets, no-cap convertible notes, liquidation preferences, etc - these terms and concepts, once arcane, are now discussed and debated openly and with vigor. And this transparency leads to efficiency.

Liquidation Preference 29

Liquidation Preference Angel Investor Incubator Early Stage 29

www.paulgraham.com

APRIL 28, 2010

When youhear people talking about a successful angel investor, theyre notsaying "He got a 4x liquidation preference." Mechanics Angel investors often syndicate deals, which means they join togetherto invest on the same terms. But angels have to beable to predict. [ VCs can be fast followers.

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63

Both Sides of the Table

SEPTEMBER 8, 2012

It has both a “full rachet” and “multiple liquidation preferences.” But Paul Graham really did have a point in his “ high resolution fundraising ” post – that there is a problem – particularly in angel financing – with herding cats. ” I wrote about it here.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Feld Thoughts

JULY 14, 2015

The first release is underwhelming, but they iterate aggressively, with feedback and support from some of their angel investors. One of their angel investors, who happens to be a VC firm, decides to invest another $500,000 in the company. and the investors, who put up $1m in a convertible note, get 0.1%.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

Startup Company Lawyer

JANUARY 9, 2011

I have also heard that many of the companies in the YC batch that Paul Graham was referring to have been dictating convertible debt terms with price caps in the high single digit million range when pitching to angel investors. A logical alternative to convertible debt is a priced Series A preferred stock financing.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

Both Sides of the Table

FEBRUARY 14, 2016

Can Investors Spook the Market into Falling? “10 angel investors walk into a bar …” Do you remember AngelGate at Bin38 ? And down rounds might favor later-stage investors over earlier-stage investors who get wiped out. Right now it’s more pain than gain. In short – no.

Valuation 150

Valuation Down Round Startup Later Stage 150