YoungUpstarts

JUNE 26, 2020

Gurinder Sangha, a securities lawyer who started Intelligize (sold to Lexis-Nexis), put it best when he said that you want to go after investors that are “in your tribe.”. Setting aside the issues of valuation of common stock vs. preferred stock, what I really didn’t understand was that a valuation is a set of expectations.

Finance 205

Finance Silicon Valley Valuation Startup 205

Austin Startup

SEPTEMBER 8, 2014

Securities and Exchange Commission for a proposed initial public offering of its common stock in an effort to raise $50M in capital. Upland Software, Inc. will soon join the rarefied air of Austin-based public companies. The company announced that it has filed a registration statement on Form S-1 with the U.S.

IPO 72

IPO Securities and Exchange Commission Software Initial Public Offering 72

Berkonomics

JANUARY 6, 2022

Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. Promissory notes come before any equity, and most late equity investments come before early equity investments, even of the same class of security.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

www.inc.com

SEPTEMBER 24, 2011

Computer Security. 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. Employee Benefits. SALES & MARKETING. Online Marketing. Advertising. TECHNOLOGY. Internet and Online Business. Business Software. Telecom and Wireless.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Scott Edward Walker

JUNE 9, 2019

Super Pro Rata Right” means a right of first offer to purchase up to 50% of the total amount of the next round raised in the aggregate of any Equity Securities (as defined below) the Company may sell or issue following the date of this Term Sheet.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Scott Edward Walker

MAY 15, 2012

For example, let’s assume that the noteholders invested $500,000 and were granted the right to convert into shares of common stock at a $4.5 Does a Startup Have to Comply with Any Securities Laws in Connection with the Issuance of Convertible Notes? Yes, a convertible note is a “security” under federal and state securities laws.

Finance 64

Finance Founder Accredited Investor Preferred Stock 64

Steve Blank

OCTOBER 24, 2017

To turn your company’s stock into cash, you engaged a top-notch investment bank (Morgan Stanley, Goldman Sachs) and/or their Silicon Valley compatriots (Hambrecht & Quist, Montgomery Securities, Robertson Stephens). Founders are taking control of the board by making the common stock the founders own more powerful.

Founder 245

Founder Technical Review CTO Hire IPO 245

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. Name of security. Pro rata with common. Legal fees.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Scott Edward Walker

APRIL 9, 2012

and (iii) what securities laws do founders need to worry about in connection with the issuance of convertible notes? Why Can’t a Startup Issue Shares of Common Stock to Investors? In fact, many incubators like Y Combinator and TechStars are issued shares of common stock for their initial investment (usually about $20,000).

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

The Next Web

JUNE 17, 2015

This typically comes down to the security, voting rights and valuation of the deal. For the security, shoot for convertible note or common stock deals, where you can; say no to preferred stock requirements that may impede your ability to raise future capital.

Equity 60

Equity Valuation Preferred Stock Common Stock 60

Business Plan Blog

NOVEMBER 13, 2013

maturity date is reached and the startup is unable to secure a round of financing, note holders can force the startup into bankruptcy. 3) Giving non-voting stock. NOTE: Angel investors are typically allocated common stock, the same class of stock as owned by founders, as opposed to preferred stocks, which are offered to VCs.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

Gust

DECEMBER 8, 2011

Enter into agreements between Newco and founders, early contributors, outside advisors or service providers under which they contribute or assign all intellectual property related to the company’s business to Newco in exchange for the issuance of founders’ stock (Common Stock). Make escrow arrangements for restricted stock (i.e.,

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Berkonomics

MAY 22, 2014

The sale of equity in private companies is regulated by the Securities Act of 1933, which requires that the company either register with the SEC or meet one of several exemptions (Regulation D). He is the recipient of the coveted “Hans Severiens Award form the Angel Capital Association, its highest honor. .

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

Gust

JULY 23, 2012

Donating stock often allows donors to make a bigger philanthropic impact and enjoy greater tax advantages than donating cash or selling the stock and donating the proceeds. By donating securities, you bypass capital gains tax and may deduct the fair market value of your gift. Q: How does the tax deduction work?

Stock 114

Stock Capital Gains Warrant Stock Options 114

Scott Edward Walker

SEPTEMBER 21, 2011

I’ve been helping entrepreneurs raise capital as a securities lawyer for 17+ years, and there are certain fundamental mistakes that I’ve seen entrepreneurs repeatedly make. Tip #1: Only Sell Securities to “Friends & Family” as a Last Resort. What about issuing shares of common stock?

Preferred Stock 45

Preferred Stock Angel Investor Entrepreneur Common Stock 45

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

Berkonomics

OCTOBER 1, 2015

Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. Promissory notes come before any equity, and most late equity investments come before early equity investments, even of the same class of security.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Austin Startup

OCTOBER 18, 2017

It’s therefore unsurprising that YC produced a security that effectively tells investors “Here are the terms. 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.

Silicon Valley 48

Silicon Valley Los Angeles Angel Investor Common Stock 48

Growthink Blog

MAY 10, 2012

Stage #2: Seed Funding Seed funding (also called seed capital) typically ranges from $100,000 to $500,000 and is often provided by angel investors, and is usually structured as convertible notes or common stock. With seed funding, you hope to grow your business and, at the very least, gain proof of concept. This video explains more.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

Both Sides of the Table

SEPTEMBER 5, 2012

Our convertible note says that it “converts into the next round of capital and into the same security.” ” So when you raise that up round on your Series A of $3 million at $12 million pre (that investor got 25% of the company and has a 1x liquidation preference) my stock converts into that same security.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Up and Running

NOVEMBER 23, 2010

But, tragically, 3 years after their apex, this firm sold for less than their annual revenue, laid off nearly the entire staff, and left common stock shareholders, my friends included, with nothing. At its height, the company employed more than 130 people and their products reached customers in dozens of countries. What happened?

Common Stock 63

Common Stock Stock Options Stock Cofounder 63

Up and Running

SEPTEMBER 20, 2021

Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors. The authorized shares or the securities are the total number of shares that have been reserved for issuance by the owner of your startup. .

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Both Sides of the Table

SEPTEMBER 8, 2012

There is simply no reason for the first angel to write you a check until you have the whole round secure, which is why people herd cats. That means they get a 50% discount to the round [25,000 shares of preferred stock at $1 / share and 25,000 warrants at $0.01 / share equals around $0.50 / share - a 50% discount]. why buy anything?

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

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. Thats more ideal thantypical.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

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 options typically vest monthly over 1-2 years with 100% single-trigger acceleration and no cliff. What are advisory shares?

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Gust

OCTOBER 3, 2011

This will usually be documented as either a straight sale of Common Stock (which is most typical) or else as Convertible Note which converts into the same security as the next professional round, but at a discount (which is actually better for everyone).

Finance 70

Finance Venture Capital Intellectual Property Early Stage 70

Professor VC

MARCH 12, 2015

I started using Authy for two-factor authentication to provide greater security in my digital currency trading. The board decided not to use an external valuation of Twilio''s common stock that had been done the month prior to the acquisition, but instead come up with their own valuation methodology.

Syndicate 28

Syndicate Syndication Silicon Valley Common Stock 28

Austin Startup

MAY 17, 2017

Their interests as an investor are more aligned with the new VCs investing in the Series A than they are with the Common Stock. For investors who want (and deserve) something ‘extra’ on top of their investment security, advisor equity, information rights, and silent observer rights should all be explored as alternatives.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48

Pascal's View

MARCH 9, 2010

Putting that point aside, for a moment, what is absent is a quoted liquid market in their equity and debt securities, which means that the determination of the book value of those private companies is necessarily subjective. The fact remains that you don’t know the value of a private asset unless you actually intend to sell it.

Government 31

Government Private Equity Institutional Investors Venture Capital 31