Gust

JUNE 7, 2014

In many, if not most, seed and early stage funding scenarios, the investments are structured in LIFO order: Last In, First Out. 5) Senior Preferred Stock and warrants. 7) Junior Preferred Stock and warrants. Invested Interests company early stage funding investors startup starup' 2) Secured creditors.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Austin Startup

JULY 6, 2018

Ask the Users Startup Accelerators: Bundled and Unbundled Over the past several years, accelerators have emerged as a powerful filtering and signaling mechanism in early-stage startup ecosystems, allowing high-potential young startups to connect with investors, advisors, and other strategic partners far faster and more efficiently than before.

Dilution 48

Dilution Startup Technical Review Equity 48

Berkonomics

OCTOBER 26, 2010

Many early stage CEOs and board members have asked for some guidance regarding pay and time commitments for board members. Pay early stage board members of companies that are not lifestyle businesses one percent of the fully diluted equity in the form of an option that vests over four years of service.

Stock Options 66

Stock Options Early Stage Stock Vesting 66

Startup Company Lawyer

AUGUST 31, 2012

Over the past few years, convertible debt has emerged as a quick and inexpensive method for startup companies to raise money from angel investors and early stage venture funds. ” As a result, Ted introduced the Series Seed preferred stock documents as an alternative to convertible debt for early stage investments.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Haystack

JULY 8, 2018

So, that’s why I’m writing this short post specifically for 1) employees of early-stage startups and 2) the earliest investors in these startups, who are often themselves new to the entire sector. You can read more about the types of stock granted in startups here.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

Startup Company Lawyer

MARCH 14, 2010

In addition, I think that a “peace treaty&# between early-stage investors and startup companies on standard terms (at least at a term sheet level) is a step in the right direction. I suspect that this seems reasonable if there is basically no due diligence due to the early stage of the companies. (By Legal fees.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Austin Startup

JULY 22, 2021

According to Pitchbook, Capital Factory has been the most active, early-stage investor in Texas since 2010. With boots on the ground in Austin, Dallas, Houston, and San Antonio, we meet the best entrepreneurs in Texas and introduce them to their investors, employees, mentors and customers. Female Founders!

San Antonio 107

San Antonio Dallas Houston Founder 107

Both Sides of the Table

SEPTEMBER 18, 2014

If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase. ” Simple. And so forth.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Up and Running

AUGUST 17, 2015

C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). During the early stages of the process, they launched a catering business and were able to cater several business school events, all the while refining their menu and getting firsthand experience test driving their concept.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. A couple of tech giants throw millions around in either cash (for which they have hoards) or part with some publicly traded stock. has now employed the same strategy.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Berkonomics

JULY 23, 2020

Is there a liquidation preference in place where the preferred investors can take a multiple of their investment, (twice or three times the amount) from a sale before the common shares receive anything? Can you protect the common shareholders? Conflicts of interest with preferred investors.

Delaware 62

Delaware Liquidation Preference Preferred Stock Early Stage 62

YoungUpstarts

JUNE 26, 2020

Many entrepreneurs waste time talking to investors who are at the wrong stage, sector or tribe. When a VC’s website says they do “early stage” – to a VC that means a product has already been built and generating some revenue, while to an entrepreneur it means “just an idea.”. This might seem obvious, but it’s not. I was wrong.

Finance 205

Finance Silicon Valley Valuation Startup 205

Startup Lessons Learned

AUGUST 26, 2009

The companies I spoke to all agreed that the community there was extremely supportive, especially in the critical ulta-early-stage. They take common stock, not preferred, a fact that the entrepreneurs mentioned to me many times. Then, create an encouraging environment for early-stage companies.

San Francisco 113

San Francisco Silicon Valley Startup Continuous Deployment 113

Gust

OCTOBER 12, 2011

In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. Particularly when there are multiple closings taking place over a period of months, the fuse burns awfully quickly on a 12-month note given the many competing priorities of early stage entrepreneurs.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

www.inc.com

SEPTEMBER 24, 2011

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. Last fall, Arizona Bay launched its own venture capital firm, Arizona Bay Technology Ventures , which will invest from $50,000 to $750,000 in early-stage start-ups.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Gust

DECEMBER 18, 2013

Note: The one significant exception to this is that Friends & Family seed rounds are usually done as Convertible Notes with a Cap, because in the absence of a professional investor (such as a serious angel or an early stage VC) the extreme likelihood is that both sides will price the deal incorrectly, and will thus cause significant problems down (..)

Valuation 150

Valuation Founder Seed Money Common Stock 150

Gust

JULY 23, 2012

Q: Wouldn’t a contribution of early-stage company stock have a very small impact? In fact, the contribution of early-stage company stock can have tremendous impact. Take an example where you donate 25,000 shares of common stock with a value of $0.20

Stock 114

Stock Capital Gains Warrant Stock Options 114

Growthink Blog

MAY 10, 2012

When seeking equity investments, the source of capital is, for the most part, tied to the stage of capital being raised. You see, equity capital is raised in stages or rounds. The five main stages include the following: 1. Early Stage Investment (Series A & B) 4. Pre-Seed Funding 2. Seed Funding 3.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

Berkonomics

AUGUST 29, 2013

Is there a liquidation preference in place where the preferred investors can take a multiple of their investment, (twice or three times the amount) from a sale before the common shares receive anything?

Delaware 66

Delaware Liquidation Preference Liquidity Event Preferred Stock 66

Gust

SEPTEMBER 17, 2014

They only people I have heard promoting them tend to be super early stage investors or accelerators and often when I talk to them about the structure they’ve never given much thought beyond “they’re easier,” “they’re cheaper” or “it’s faster to raise this way” none of which is actually true. “But And so forth.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Berkonomics

DECEMBER 6, 2010

Use stock options and warrants to pay for service only rarely. Earlier, I stated that stock options are the currency of early stage business. Second, when making such a decision, assess the speed of growth and risks associated with that growth, as both would affect the value of the common stock.

Stock Options 61

Stock Options Stock Warrant Common Stock 61

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. Stock appreciation rights: Stock appreciation rights generally give the recipient the right to receive money based on increase in the value of the company’s stock.

Equity 60

Equity Employee Stock Options Vesting 60

YoungUpstarts

JUNE 23, 2015

If you’re considering making a significant investment in a start-up or early stage company, follow these nine tips to avoid becoming a victim: 1. Do you have common stock (or membership units)? If preferred, what are the differences between common and preferred? Don’t get scammed. When did you invest?

Private Equity 100

Private Equity Common Stock Equity Reputation 100

Gust

OCTOBER 21, 2011

Assuming a hypothetical $100,000 investment at a 10% interest rate, this kind of payoff would yield a return of $5,000 ( 5% ) six months later – not exactly the kind of return angel investors are looking for when they make risky early stage investments. a mix of cash and stock) received by other equity holders in the transaction.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Both Sides of the Table

SEPTEMBER 5, 2012

You rarely find full ratchets in early-stage deals any more. Nobody I know accepts multiple liquidation preferences in early-stage deals. And every seed stage VC tells me they don’t ever even ask for them. I’ve done series seed, early-stage deals in 8 days. That’s not possible.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

K9 Ventures

MAY 14, 2011

In my view the terminology being used for early stage investors by the press and the media is not as clear as it should be. I’ve talked about this on several occasions when I’ve been at conference and on panels, but I figured it would make sense to do a post explaining my taxonomy of the early-stage investing world.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

www.payne.org

SEPTEMBER 22, 2011

Stock Classes: Common and Preferred. Most venture-funded startups have different classes of stock: common and various flavors of preferred. Your offer will almost surely be for common stock. If the company is acquired or liquidated, the preferred stock holders will get paid first.

Equity 56

Equity Employee Vesting Preferred Stock 56

Growthink Blog

APRIL 7, 2010

million from three individual angel investors and one early-stage venture capital fund. The name "Series A" refers to the class of preferred stock that you sell to investors in return for their cash. It's just two successful entrepreneurs trying to improve on products in an established industry.

Angel Investor 54

Angel Investor Preferred Stock Venture Capital Common Stock 54

The Entrepreneurial Mind

MARCH 10, 2010

JumpStart Foundry will focus on very early-stage concepts. In return for this investment, JumpStart Foundry will receive a collective 10% ownership in the Common Stock of the company. This amount of capital is often much more than an entrepreneur can effectively utilize at the very early-stage of concept development.

Nashville 53

Nashville Tennessee Early Stage Common Stock 53

keen.io

FEBRUARY 5, 2013

These were the best resources I found: Equity for Early Employees in Early Stage Startups. Startup Equity for Early Employees. I asked for equity in the form of restricted stock instead of common stock (In my research, I found there is a significant long-term gains tax advantage.

Salary 50

Salary Equity Startup San Francisco 50

Austin Startup

OCTOBER 18, 2017

The most common and important is ensuring a majority of the principal can extend maturity for everyone; so if enough of your early investors still support you, you get more time. Extensions are very common. Lawyers specialized in early-stage financing can help here.

Silicon Valley 48

Silicon Valley Los Angeles Angel Investor Common Stock 48

Both Sides of the Table

MARCH 21, 2010

Early in your company’s evolution, high-potential individuals take a bigger risk to join you so you’re more liberal with your allocations to them. Having a few high-potential individuals determines your success trajectory more in the early stages. Make the warrants for common stock and not preferred stock.

Warrant 298

Warrant Dilution Startup Stock Options 298

Scott Edward Walker

SEPTEMBER 21, 2011

Moreover, the company would need to be valued at the time of the investment, which is obviously difficult at an early stage and could be extremely dilutive to the founders. What about issuing shares of common stock? the pricing) until the Series A round. a set value at which the notes convert).

Preferred Stock 45

Preferred Stock Angel Investor Entrepreneur Common Stock 45

ReadWriteStart

JANUARY 28, 2022

Common stock. The holding of common stock in a company indicates ownership in the corporation. Investors of common stock are eligible for : The choice of the Board of Directors. However, the holder of a warrant holds a leveraged bet on the corporation’s common shares. Preferred shares.

Valuation 108

Valuation Equity Warrant Common Stock 108

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

The Startup Lawyer

FEBRUARY 4, 2011

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. 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

Tim Keane

JANUARY 12, 2010

  A cumulative dividend can get to be very expensive and is not often a feature in early stage terms.   A cumulative dividend can get to be very expensive and is not often a feature in early stage terms.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68