Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. It is essential to understand the funding structure stated in your term sheet and the advantages and disadvantages it may have for your business. These investments are made instead of shares or equity in your startup.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

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

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. Form of Convertible Security Term Sheet.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Business Plan Blog

NOVEMBER 13, 2013

The first milestone in a new startup’s financing is called ‘Seed Capital’ which refers to the initial investment raised by the founders from their friends and family, or commonly referred to as FFF (Friends, Family and Founders), who mostly use their personal assets. *The Convertible Debt Financing. Raising Seed Capital.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

Gust

OCTOBER 21, 2011

Readers joining this series in progress may find it helpful to download the sample term sheet from my firm’s website and review the earlier posts covering the basics. Using our hypothetical numbers, assuming the notes have an 18-month term, the return would be $15,000 ( 15% ) – again nothing to write home about.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

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. Simply put, pro rata rights permit the investor to maintain its percentage ownership in subsequent financing rounds. Introduction. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. Objectively. Either that or they’re dumb. Last year ….

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

www.mattbartus.com

SEPTEMBER 24, 2011

First, you’d probably want them to receive common stock, not preferred stock (which is the likely next round). Matt is a lawyer representing technology companies through all phases of their lifecycle, from pre-incorporation, seed & VC financings, exit transactions and IPOs (read more). Term Sheets.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

Both Sides of the Table

SEPTEMBER 5, 2012

Was Paul Graham right in his “high resolution” financing post? 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.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

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. Thank you sir, may I have another!"

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

ReadWriteStart

MAY 8, 2012

Like most first-time entrepreneurs, we were so excited by our first term sheet — and scared we wouldn’t get another — that we came very close to accepting it, even though the investors weren’t the best fit. The more we examined the terms of the investment, the more we found things that seemed ‘off’ about their offer.

Cofounder 140

Cofounder Startup San Francisco Silicon Valley 140

Scott Edward Walker

JUNE 9, 2011

Introduction This post originally appeared as part of the “ Ask the Attorney ” column I am writing for VentureBeat ; it is another installment of my ongoing series regarding venture capital term sheets. As many of you know, VC investors are typically issued shares of preferred stock, not common stock.

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

The Startup Lawyer

FEBRUARY 4, 2011

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. Like any issuance of stock or investment, one of the main things a startup should be concerned with is: Is this going to fuck up a future financing ?

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

www.payne.org

SEPTEMBER 22, 2011

UPDATE: If youre a founder or near-founder, your equity terms are likely defined by the funding terms negotiated with the investors. For a very good summary of investor terms, see Brad Felds writeups on term sheet terms. Stock Classes: Common and Preferred.

Equity 56

Equity Employee Vesting Preferred Stock 56

Both Sides of the Table

SEPTEMBER 8, 2012

But Paul Graham really did have a point in his “ high resolution fundraising ” post – that there is a problem – particularly in angel financing – with herding cats. You simply draft up a series seed term sheet. We’re either “all in the round together” or we’re not.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Startup Company Lawyer

JANUARY 9, 2011

Convertible debt with a price cap seems to be the preferred structure for early-stage financings. 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. Is a priced Series A financing a valid alternative?

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

Austin Startup

MAY 17, 2017

They’ll often ask for different variants of ‘information rights’ — which can include delivery of regular financials, and notification of major transactions (like financings). 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

venturehacks.com

OCTOBER 21, 2010

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. What do you mean by “convert into common shares&# ? This can be done on any financing or M&A event.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

The Entrepreneurial Mind

MARCH 10, 2011

ownership in the Common Stock of the company. This is true in the typical areas of accounting, finance, marketing, fundraising (like other micro funds). In addition, three members. of the group offered their knowledge and experience to mentor the. entrepreneur and accelerate the success of the project. In return for.

Nashville 65

Nashville Tennessee PHP Ruby 65