Both Sides of the Table

SEPTEMBER 5, 2012

Was Paul Graham right in his “high resolution” financing post? 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. Convertible debt WITH a cap is stupid for founders.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Company Lawyer

MAY 4, 2009

Adeo Ressi , the founding member of TheFunded , recently announced the establishment of TheFunded Founder Institute. The Founder Institute helps founders launch innovative companies by providing training, services, and company-building assignments, such as incorporating the business, filing provision patents, and setting up books and records.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Austin Startup

JULY 6, 2018

Re: cash, the more “unbundled” types of accelerators (less formalized, less equity) tend to not provide any cash upfront, but also typically “cost” less in equity, often just 1–2% of your fully diluted capitalization. Some accelerators will require you to “make room” for them in future financings up to a certain amount. Anti-Dilution.

Dilution 48

Dilution Startup Technical Review Equity 48

Startup Company Lawyer

AUGUST 31, 2012

One major concern about convertible debt is that it eventually needs to be repaid if another round of financing doesn’t occur. ” If the company didn’t raise a round of financing, the convertible debt would convert into the last round of financing (i.e. Series A) or have to be repaid.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. Under that scenario, the same $500,000 is only worth a 10-ish percent stake in the business, and the founder can retain far more control in the entity.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Both Sides of the Table

JULY 29, 2010

The downside is that people need to buy their stock. I talked also about 409a valuations and why common stock purchases cost less than preferred stock purchases. But most importantly I lectured founders that you can’t avoid the admin of setting up your ESOP. Do it early. Check ‘em out!

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Scott Edward Walker

APRIL 9, 2012

Introduction We are in the golden age of seed financing. Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. Why Can’t a Startup Issue Shares of Common Stock to Investors?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

www.inc.com

SEPTEMBER 24, 2011

Finance | Tuesdays. Financing a Small Business. Financing A Small Business. Personal Finance. 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. Start-up | Mondays. Technology | Thursdays.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Startup Company Lawyer

APRIL 23, 2009

Adeo Ressi , the founding member of The Funded , recently announced the establishment of The Funded Founder Institute. The program participants, the Founders, receive extensive training in weekly sessions overseen by three Mentors – two seasoned CEOs and one domain expert for each topic. Protective provisions.

Common Stock 33

Common Stock Stock Dividend Delaware 33

Up and Running

AUGUST 17, 2015

Additionally, I had already studied Economics and Finance during undergrad, making the academic part of an MBA seem a little redundant. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). This can be particularly important for founders with “non-traditional” career backgrounds.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. There were no metrics.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

keen.io

FEBRUARY 5, 2013

The founders had been dropping hints that they wanted me to join them. To begin answering this question, I started on a quest to understand startup financing. I knew this meant that the founders had come to some conclusion about what to offer, and now I was going to find out what it was. I hoped an offer letter was coming soon.

Salary 50

Salary Equity Startup San Francisco 50

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

Tim Keane

JANUARY 12, 2010

For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.   First , dividends.   Why is this fair?

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Eric Friedman

JUNE 27, 2016

Here are the questions I like to see founders ask potential advisors; 1. A little bit of background first on options: In order to issue options, your company must have a valid 409A valuation setting the fair market value (“FMV”) of a share of common stock. So why would you do this? strike price.

Equity 98

Equity Vesting Cap Table Common Stock 98

ReadWriteStart

MAY 8, 2012

I did recover from this, but when you start the funding process, evaluate exactly what you need to do to get to the next steps and how much that will cost. Gina Mancuso , Founder and CEO of LoveThatFit. Avichal Garg , Co-Founder and CEO of Spool. Justin Beck , Co-Founder and CEO of PerBlue. Stay positive, stay focused.”

Cofounder 140

Cofounder Startup San Francisco Silicon Valley 140

venturehacks.com

MARCH 21, 2008

Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options. Advisory shares are normal common stock. The opportunity cost is probably too high. If you pay in equity, you pay once and keep getting served ad infinitum.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Gust

DECEMBER 8, 2011

Likewise, founders can benefit from understanding basic characteristics of the overall legal structure, formation and governance documents, rights and responsibilities of team members, etc. Determine who will serve on the Board of Directors and in executive officer positions (usually founders). Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

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. Most incubators take common stock and sit “side-by-side&# with the founders, but some may want some (weak) preferred stock and/or dilution protection.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

www.payne.org

SEPTEMBER 22, 2011

2 Stock Classes: Common and Preferred. 5 Stock vs Options. 6 Founders / Restricted Stock. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. From Payne.org Wiki.

Equity 56

Equity Employee Vesting Preferred Stock 56

Startup Company Lawyer

JULY 20, 2009

I am giving a presentation to some of the founders in TheFunded Founder Institute on incorporating their companies, so I thought I would recycle some thoughts.]. Founders of startup companies often wait to incorporate a company until they are confident that their concept is viable or fundable. More than one founder.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

venturehacks.com

OCTOBER 21, 2010

Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# If you don’t keep your eyes on the option pool, your investors will slip it in the pre-money and cost you millions of dollars of effective valuation.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Professor VC

FEBRUARY 18, 2011

Techcrunch called it one of the " most like-minded and forward-thinking acquisitions I’ve ever seen " I met with the founders of CardMunch several months ago when they were out raising their Series Seed round. I liked the founders (Bowei and Sid) a lot more than the business.

Acquisition 31

Acquisition San Jose Angel Investor IPO 31