Gust

DECEMBER 18, 2013

Assuming the company is able to make effective use of the seed money to greatly increase the value of the enterprise, all of that value therefore accrues to the founder, rather than the investor.

Valuation 150

Valuation Founder Seed Money Common Stock 150

Gust

OCTOBER 12, 2011

In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. Readers may find it helpful to download the sample term sheet from my firm’s website and follow along with the commentary.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

www.inc.com

SEPTEMBER 24, 2011

Last spring, Dave Graham , founder of software consulting firm Arizona Bay, learned that a major client, Jumpstart Automotive Media, had been acquired for more than $80 million. Graham also pushes for common stock, the right to participate in future funding rounds to preserve the size of the stake, and a guaranteed seat on the board.

Arizona 40

Arizona Equity Iowa Venture Capital 40

keen.io

FEBRUARY 5, 2013

The founders had been dropping hints that they wanted me to join them. This book was written to help founders negotiate financing with investors, but it really helped me understand Keen’s financial situation, and I highly recommend it to anyone joining a startup. Startup Equity for Early Employees. So I knew a little bit.

Salary 50

Salary Equity Startup San Francisco 50

Gust

SEPTEMBER 17, 2014

I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies. There are a bunch of ways to offer cheaper pricing to people who commit early without notes.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Up and Running

DECEMBER 1, 2015

Typically, employers that offer employees equity compensation will do so in the form of common stock, preferred stock, or stock options. As opposed to stock options where the employee can decide to purchase the stock or not, restricted stock is often “granted” or given to the employee.

Equity 60

Equity Employee Stock Options Vesting 60

Gust

OCTOBER 21, 2011

In Parts II and III, we looked at commonly used mandatory and voluntary conversion language in convertible notes. In descending order of preference from the founders’ point of view: 1. Investors would be repaid their principal, plus accrued interest, divided by the conversion price (let’s say 30% discount, so 1 – 0.3 = 0.7).

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Austin Startup

OCTOBER 18, 2017

Background Reading: Should Non-SV Founders use SAFEs in Seed Rounds? the majority of the content available online for founders to educate themselves comes from Silicon Valley. Purely from the perspective of founders, it is a fantastic deal. TL;DR : Still not seeing a ton of SAFE adoption, albeit a slight uptick.

Silicon Valley 48

Silicon Valley Los Angeles Angel Investor Common Stock 48

Both Sides of the Table

SEPTEMBER 5, 2012

Can you imagine investing in the stock market where your price was determined at a future date and the better that company performed the HIGHER the price you paid for that investment. In fact, most early investor work hard to help their startups get to the next level so it makes no sense for the angel investor and founders to be at odds.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Tim Keane

JANUARY 12, 2010

  A cumulative dividend can get to be very expensive and is not often a feature in early stage terms. These include: ·       Vesting of Founder Stock.   Oftentimes, term-sheets specify provisions under which there is not a majority on the board from either founders or investors.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

The Startup Lawyer

FEBRUARY 4, 2011

But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. As equity in the company tends to be the currency of early stage startups, the startup should have a good foundation for assigning value in terms of equity.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Up and Running

SEPTEMBER 20, 2021

Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors. Founders can apply the information to instantly ascertain what percentage of the startup they have to propose a new investor. Total share ownership.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Austin Startup

AUGUST 1, 2017

This is most clearly highlighted in the “unicorn” boom we all saw over the past few years, where founders raised very large rounds, with terms very onerous to the underlying common stock, hoping they could eventually justify billion dollar valuations to skeptical acquirers or public market investors.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48