ReadWriteStart

JUNE 1, 2020

In very few specific cases, depending on the nature of the business, the business model might demand a considerable gestation period or extensive research and development. The shares given out can either be common stocks or preferred stocks. ? Debt investment.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Austin Startup

JULY 6, 2018

More traditional and comprehensive programs often require 5–8% of common stock, but often provide between $20K and $100K up-front as well. However, for the most in-demand startups, over-committing on future participation rights can become a problem because it can require you to raise more money than you really need to.

Dilution 48

Dilution Startup Technical Review Equity 48

Startup Company Lawyer

AUGUST 31, 2012

At the maturity date, there is a risk that investors may demand repayment. There are some features in the sample documents that I like — such as the conversion discount being paid in common stock — that are in the form of convertible debt documents used by YC. Why convertible equity is better than convertible debt.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Startup Professionals Musings

MAY 18, 2015

When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. Facilitate an upgrade of founder’s common to founder’s preferred.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Startup Professionals Musings

JANUARY 29, 2018

I’ll never forget that great sense of excitement I felt when I incorporated my first business, and realized that I was now the proud owner of 10 million shares of common stock. Negotiate an upgrade from common shares to preferred stock. It’s great motivation for every entrepreneur to get that value up quickly.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

Both Sides of the Table

SEPTEMBER 5, 2012

They are either a sign of naive founders or naive investors (because they will quickly develop a reputation in the market and because future investors in that company will all demand your terms, which therefore will include a full ratchet). So as your initial investor at a $2.5m

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

K9 Ventures

NOVEMBER 21, 2011

And that too usually when there is sufficient investor demand for the next round, i.e. the leverage needs to be in the company’s hand (rather than investors) for any type of founder liquidity to even be an option. 3) Setting a precedent for the price of the Common Stock : This is the biggest issue with founder liquidity.

Founder 87

Founder Common Stock Preferred Stock Stock 87

K9 Ventures

NOVEMBER 21, 2011

And that too usually when there is sufficient investor demand for the next round, i.e. the leverage needs to be in the company’s hand (rather than investors) for any type of founder liquidity to even be an option. 3) Setting a precedent for the price of the Common Stock : This is the biggest issue with founder liquidity.

Founder 84

Founder Common Stock Preferred Stock Stock 84

Startup Company Lawyer

MARCH 14, 2010

If I represent investors in a later Series A financing, I would probably use the existence of the drag-along as an excuse to implement a more aggressive drag-along provision — which does not require the approval of the holders of common stock to trigger. Legal fees. The company is obligated to pay $10K for investors counsel.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

ithacaVC

MAY 1, 2013

The article states “When venture capitalists invest, they typically demand preferred shares that accrue a yearly dividend of about 8 percent. It is ONLY once the VC’s liquidation preference is cleared that the common stock held by founders and employees is worth anything. I hope that does not need much explanation.

Dividend 45

Dividend Liquidation Preference Common Stock Venture Capital 45

Gust

OCTOBER 12, 2011

In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. Thus, it’s in everyone’s best interest to see the startup raise more capital rather than declaring default and demanding repayment. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Gust

OCTOBER 21, 2011

a) payable upon demand as of the closing of such transaction; or. (b) a mix of cash and stock) received by other equity holders in the transaction. b) redeemable for a payment equal to the amount each Note Holder would have received had the Note converted immediately prior to the transaction to. (b)

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

abovethecrowd.com

MAY 20, 2013

There are common stock, common options, and as many as three to five different layers of preferred stock, each with a specific liquidation preference. Basically, everyone uses loose finance arguments to over-inflate their own company’s valuation so that they can demand a bigger slice of the pie of the new company.

Merger 53

Merger Institutional Investors Liquidation Preference Preferred Stock 53

Tim Keane

JANUARY 12, 2010

  The right of first refusal for all of a future financing is a very unfriendly provision to entrepreneurs that can make future financing all but impossible.   ·       Conditions Precedent mean that the closing of the proposed offering is subject to the conditions specified here.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

www.paulgraham.com

APRIL 28, 2010

A lawyer I asked about it said: When the company goes public, the SEC will carefully study all prior issuances of stock by the company and demand that it take immediate action to cure any past violations of securities laws. Theres only common stock at this stage.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Pascal's View

MARCH 9, 2010

There has been a multi-year move among auditors, driven by demand for greater transparency in understanding the process behind the book valuation of private, illiquid investments, to bring more of a “mark to market” approach in the way the general partners of private equity partnerships value their portfolios.

Government 31

Government Private Equity Institutional Investors Venture Capital 31

Professor VC

JULY 25, 2013

One area I''ve noticed a lot more recently are angel investors and seed stage funds trying to grab a little bit extra, whether it''s warrants for leading the round, advisor shares to go along with the investment, or a common stock stake for just being who they are. Unfortunately, not everyone follows the KISS principle.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46