Scott Edward Walker

JUNE 9, 2019

Over the past few weeks, two of my clients have received financing term sheets in which the investors requested super pro rata rights. Accordingly, I thought it would be helpful for founders to discuss these rights and to point out the problems they create for startups. Introduction. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. I’ll continue with more specific terms and wrap up next week with some thoughts about recent changes and trends for the future. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Business Plan Blog

NOVEMBER 13, 2013

Most startup founders do not have enough capital to launch their companies and need to raise money at some point. FFF investing is not a short-term play and mostly investors do not get a return on their investment immediately. Individual investors who provide financial funding to startups are called ‘Angel Investors.’

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

ReadWriteStart

MAY 8, 2012

Approaching investors for the first time is a daunting exercise for any startup. The best way to do that is to leverage the hard-won experience of real-world startup. Turns out that while every startup is unique, they share some common difficulties in trying to find just the right strategies and tactics for funding their companies: 1.

Cofounder 140

Cofounder Startup San Francisco Silicon Valley 140

Both Sides of the Table

SEPTEMBER 5, 2012

I can’t say it much simpler than this: “What if I took some of the worst, most egregious terms in a standard term sheet and made them the defacto standard in most convertible debt deals? Let me explain it more clearly in equity terms. Some thoughts on raising angel money. That’s right.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! 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. Pre-money valuations startups receive from incubators are typically low…really low.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Both Sides of the Table

SEPTEMBER 8, 2012

I recently wrote about my views that startups rounds should be priced. Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. You simply draft up a series seed term sheet. Another easy way to do it is the term sheet create Series Seed A-1 and Series Seed A-2.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Austin Startup

MAY 17, 2017

It’s pretty well known that startups usually undergo a meaningful change in Board composition at their Series A round. Less has been written about what startup boards tend to look like before a Series A round. Having a VC already on your seed-stage Board can make it harder to get term sheets from outsiders for your Series A.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48

Startup Company Lawyer

JANUARY 9, 2011

Over the last 12 months, I’ve noticed a trend where early-stage startup companies raise seed financings of between $250K and $1M using a convertible note with a price cap. Tweaking convertible debt so that common stock (instead of preferred stock) is issued for the conversion discount in order to limit liquidation preference overhang.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

venturehacks.com

OCTOBER 21, 2010

Venture Hacks Good advice for startups. You explain that the company currently has 6M shares outstanding so the investors must be valuing the company’s stock at $1.33/share: Later that evening you review the term sheet from Blue Shirt. share: $8M pre-money ÷ 6M existing shares = $1.33/share.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68