The Startup Lawyer

DECEMBER 10, 2015

A startup founder’s desire to hold equity better than plain-vanilla common stock isn’t new. Several years ago, Series FF stock for founders was all the rage when it came to founder liquidity at subsequent financing rounds. We implemented Series FF for a handful of clients back then but we haven’t done so recently.

Common Stock 40

Common Stock Stock Founder Equity 40

David Teten

JANUARY 19, 2021

Eligible for favorable treatment under Qualified Small Business Stock exemption, if structured as equity. This applies if the investment converts into common stock; details are beyond this essay’s scope. Womble Bond Dickinson has released a white paper on Performance Aligned Stock and a term sheet on ImpactTerms.org. . (If

Cofounder 78

Cofounder Technical Review Equity Dividend 78

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. Even though initial stock has no market value today, it is extremely valuable in dividing equity ownership between co-founders, investors, and early partners.

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Stock Vesting Preferred Stock Cofounder 129

ithacaVC

APRIL 5, 2011

A cap table is a written record (in Excel, for example) of who owns stock in your company. It lists every owner out by amount owned, type of stock (common or preferred), and date purchased. For clarity, it is impossible to issue stock without putting a value on the company. I am a huge fan of simple cap tables.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Gust

MARCH 16, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms and considerations for Founder’s stock: Negligible real value.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

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. Make sure the government waits for a stock sale to collect taxes. Spread stock issuance over an earning period. In the U.S.,

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Gust

NOVEMBER 28, 2023

Over the past 20 years, the typical structure for seed/angel deals has shifted from common stock (in the mid-1990s) to convertible notes (late 1990s through early 2000s) to full Series A convertible preferred (mid-2000s) to convertible notes with a cap (late 2000s) to Series Seed convertible preferred or similar (present).

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Due Diligence Term Sheet Common Stock Stock 91

Feld Thoughts

OCTOBER 7, 2013

This check is for The Community Foundation and for the Entrepreneurs Foundation of Colorado (EFCO) and results from a gift of 24,793 shares of common stock from Rally at the time of its first financing that represented approximately 1% of the equity of the company. I remember numerous conversations with Ryan about this.

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Community Colorado Common Stock Equity 182

Up and Running

AUGUST 28, 2019

Agree upon how much of this business each of your leaders owns, and write that down on slips of paper called “stock certificates”. If you used an incorporation service, they might have sent you a nice binder with your bylaws template, stock certificates, and maybe even a nifty corporate seal embosser (neat!). Issue stock.

Delaware 83

Delaware Stock Nevada Technical Review 83

Growthink Blog

JANUARY 24, 2011

The question is whether they need to issue common or preferred stock. The answer depends on how and what rights are defined in the preferred stock. One very popular "preferred right" or "preference" that adds very significant value to outside investors and is common in venture capital investments is a liquidation preference.

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Preferred Stock Stock Common Stock Liquidation Preference 93

Startup Professionals Musings

OCTOBER 7, 2010

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms for founder’s stock: Negligible par value.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

Steve Blank

APRIL 26, 2022

They offered desperate founders more cash but insisted on new terms, rewriting all the old stock agreements that previous investors and employees had. Some even insisted that all prior preferred stock had to be converted to common stock. Other times it was simply a take-it-or-leave-it, here are the new terms.

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Cram Down Founder Venture Capital Recapitalization 404

YoungUpstarts

AUGUST 25, 2015

Owners of corporations also pay taxes when they are paid dividends or profit from sale of the stock, which is why it is common to say that corporations are “double-taxed.” Ownership of a corporation is measured in stock. Stocks are issued at the time the company is formed, and more can be issued over time. Management.

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LLC Technical Review Software Review Limited Liability Company 100

OnlyOnce

FEBRUARY 1, 2024

Sometimes when you’re doing a strategic acquisition and it’s an all-stock deal, you can insist as a term of the acquisition that the target company’s investors invest more capital into your company. That’s right, not only do you not have to put cash OUT for the deal, you’re getting additional cash IN.

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Cap Table Common Stock Acquisition Stock 71

VC Adventure

AUGUST 15, 2018

As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the company as well). Back in the olden days of venture capital, company boards had wide discretion in pricing company options.

Valuation 48

Valuation Common Stock Cap Table Software Review 48

Both Sides of the Table

JULY 29, 2010

Mark Jeffrey - Q: “Is it more traditional to do your ESOP (employee stock option plan) before or after your angel or Series A funding?&# I talked about the need to have a restricted stock plan for your earliest employees. The downside is that people need to buy their stock. This is minutes 8-11.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Agile VC

APRIL 17, 2011

Interesting to note that Hafner and English own common stock but also made meaningful investments in the Series A & B rounds. Notes: In an IPO preferred share classes are converted into common stock, and liquidation preferences and accumulated but unpaid dividends essentially go away. as of 12/31/09). Author howerl.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

MAY 27, 2013

In addition to helping manage the board Chris also helps represent the interests of the angel investors / common stock holders. And you can often throw in a separate action like approving stock-option grants, getting approval for CAPEX spend, discussing fund raising timing – whatever. That in itself is quite a challenge.

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Advisory Board CTO Hire Fractional CTO Los Angeles 365

View from Seed

DECEMBER 4, 2014

Additionally, you should put whatever agreement you reach to paper , even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

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Equity Founder Sweat Equity Cofounder 315

Feld Thoughts

JUNE 11, 2021

We didn’t have any financing except for Brad’s credit card and the $10 with which we had purchased our common stock. We employed half a dozen programmers, most of whom were undergraduates from our fraternity working part-time. Dave walked into Brad’s office after calculating preliminary financial results for January.

Common Stock 70

Common Stock Europe Boston Software Developers 70

Gust

JULY 23, 2012

Donations of private stock enable investors, founders and employees to support charitable causes and contribute to the community while receiving simultaneous benefits in the form of substantial cash savings from reduced taxes as well as bypassing capital gains taxes. These assets often have a relatively low cost basis (e.g. The Tax Benefit.

Stock 114

Stock Capital Gains Warrant Stock Options 114

Agile VC

DECEMBER 4, 2014

Additionally, you should put whatever agreement you reach to paper, even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

Both Sides of the Table

JULY 22, 2010

Things like “ participating preferred stock &# in legalese unsurprisingly never actually call out, “hey, this is the participating preferred language.&# We got a3x participating liquidation preference with interest (not participating with a 3x cap, but 3x participating. 4 * $4 million) and not $4 million.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Up and Running

SEPTEMBER 19, 2017

For a business that anticipates needing, for example, $500,000 in startup capital, that means that best-case scenario Klemm can expect to give up half of his business’s common stock (and an even larger percentage of control of the business once the deal’s fine print provisions are considered).

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Scott Edward Walker

SEPTEMBER 28, 2011

Indeed, you must make sure that all of the shares of common stock issued by the corporation to the founders are subject to vesting restrictions – which means that ownership of the shares would vest over time (instead of all of the shares being owned outright on day one). Vesting Restrictions. code, logo, domain name, etc.)

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Vesting Software Review IP Intellectual Property 89

Both Sides of the Table

FEBRUARY 20, 2019

If angel investors are pressuring you to set up a board and if you don’t have the leverage to push back a little then I might suggest a 3-person board in which all 3 seats are appointed by the common stock and you agree to appoint one of these seats to the angel investor but perhaps make it either time based or event based.

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Venture Capital Startup Angel Investor Silicon Valley 236

Startup Company Lawyer

APRIL 23, 2009

These provisions include a special class of super-voting common stock, called “Class F&# common stock, which is named for “Founders.&#. The COI includes Class A common stock, which has one vote per share, and Class F common stock, which has 10 votes per share. Protective provisions.

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Common Stock Stock Dividend Delaware 33

YoungUpstarts

JANUARY 16, 2020

Though they offer lower returns, bonds are considered safer than stocks. Owning stocks has long been considered the best, yet a risky way to build one’s wealth. Investing in stocks is a way to increase your money and surpass inflation. Shareholders also get dividends through some stocks.

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Dividend Stock Common Stock Capital Gains 147

Scott Edward Walker

OCTOBER 19, 2020

Usually this is done as part of the founder’s Restricted Stock Purchase Agreement pursuant to which the IP is contributed to the startup as full or partial consideration for the shares of common stock issued to him in a tax-free transaction under Section 351 of the Internal Revenue Code. Any IP created by a founder (e.g.,

IP 52

IP Software Review Founder Technical Review 52

Startup Professionals Musings

JANUARY 22, 2013

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms and considerations for founder’s stock: Negligible real value.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Feld Thoughts

DECEMBER 28, 2011

If accepted, each company will receive an equity investment of $20,000 in exchange for six percent of the company in common stock, which will be held by TechStars. Microsoft’s Kinect Accelerator is powered by TechStars and applications for the Kinect Accelerator are now being accepted through January 25, 2012.

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Intellectual Property Common Stock Seattle Cofounder 134

The Startup Magazine

NOVEMBER 14, 2018

While investing in stocks, cryptocurrency, and companies can boost your wealth in less time, choosing the right path to take is essential to avoid missing out on growth opportunities. Stock Options. Investing in stocks is another alternative to generate additional income streams.

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Common Stock Stock Stock Options Startup 103

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. Equity investment is the most popular and most talked-about avenue for startup funding. These investments are made instead of shares or equity in your startup. Debt investment would have a repayment timeline and incur interest rates.

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Startup Entrepreneur Elevator Pitch Seed Stage 150

Up and Running

DECEMBER 1, 2015

At the time, Facebook wasn’t the goliath it is today and so, Choe was given a couple of options: he could have $60,000 in cash, or stock (equal to the equivalent amount of the cash back then). If however you are giving a “normal employee” an incentive stock option plan (more on that later), that’s entirely different.

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Equity Employee Stock Options Vesting 60

Both Sides of the Table

SEPTEMBER 18, 2014

If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early. Less than you’ll probably grant your most junior employees in stock options? Stock Option plans.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Agile VC

DECEMBER 4, 2014

Additionally, you should put whatever agreement you reach to paper, even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

SiliconHills

JULY 29, 2013

Austin-based SolarWinds announced Monday that the software company plans to repurchase up to $50 million worth of its common stock. The post SolarWinds Announces $50 Million Stock Buyback appeared first on SiliconHills.

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Stock Common Stock Austin Software 55