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What is convertible equity (or a convertible security)?

Startup Company Lawyer

” As a result, Ted introduced the Series Seed preferred stock documents as an alternative to convertible debt for early stage investments. Convertible debt with a maturity date longer than one year creates problems for California-based investors due to licensing requirements under the California Finance Lenders Law.

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Corporation or LLC? Business Organizations for Tech Startups.

YoungUpstarts

Stocks are issued at the time the company is formed, and more can be issued over time. You can control the power of your company’s stock by issuing different classes. M&R is a national law firm with offices in California and New York. The ownership structure of an LLC is a blank slate.

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How to Form a Corporation

Up and Running

California can be appealing to California-based investors (particularly fast-growth tech companies) despite high income and corporate taxes, and franchise fees for all businesses regardless of size. This article will not delve into the more complex options and requirements for a corporation’s stock.

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Equity for Consultants – Keep it Simple!

www.mattbartus.com

First, you’d probably want them to receive common stock, not preferred stock (which is the likely next round). California companies can have specific salary arrangements with salaried employees. All forms of creativity are welcome, but I do think it suffers a little bit from the complexity problem.

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Convertible Note Seed Financings: Econ 101 for Founders

Scott Edward Walker

ii) why are convertible notes issued instead of shares of common or preferred stock? As discussed in part 1 , in the context of a seed financing, a convertible note is a loan that typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing.

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“Bored” of Directors Can Become Clash of Titans

Gust

This tension explains why shareholder advocacy groups, large investment funds, and (to a varying extent) the SEC put so much energy behind initiatives related to executive compensation , Board independence, shareholder proposals (the corporate equivalent of direct democracy — e.g., propositions on the ballot in California), and so forth.

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“Founder Friendly”

Austin Startup

Out of State VCs When you’re not CEO Material Preferred Stock v. Common Stock Ask the Users Because we’re known as Startup/VC lawyers who don’t represent VCs (just companies), I often get asked about my thoughts on “founder friendliness.” This dynamic is strongest in California. Good entrepreneurs and advisors know that.

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