Gust

OCTOBER 17, 2011

Remember a term sheet agreement is not a deal until the check clears. However, there is no set pattern of terms an entrepreneur might be able to anticipate from either. Your best strategy is to bring your own term sheet to the negotiation as a starting point. Define equity type. Outline multiple tranches.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Both Sides of the Table

JULY 29, 2010

We received so much positive feedback from our This Week in Venture Capital show walking through valuation calculations & term sheets that we decided to do a Q&A show this week to address topics that entrepreneurs want to learn about. The downside is that people need to buy their stock. Do it early.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

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

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

Both Sides of the Table

SEPTEMBER 5, 2012

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. Some thoughts on raising angel money. That’s right.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Gust

AUGUST 6, 2014

In all cases, the one fundamental requirement is that the company and the investor agree on how much is being invested, and on what terms. These items are included in what is known as a term sheet. What the terms end up being, and how a company and the investor(s) arrive at that term sheet, can differ widely.

Term Sheet 170

Term Sheet Lead Investor Preferred Stock Common Stock 170

Austin Startup

JULY 22, 2021

Access to the Capital Factory Mentor network as long as we are shareholders Up to $250,000 in potential total hosting credits from AWS, Google Cloud, Microsoft Azure and other major hosting providers (each individual offer is different and subject to change) A free Capital Factory coworking membership for you and your team for six months Capital Factory (..)

San Antonio 107

San Antonio Dallas Houston Founder 107

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

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

Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). This post assumes that you have a basic understanding of Series A financing terms. Y Combinator Series AA Equity Financing Documents (by WSGR). Legal fees.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

SEPTEMBER 8, 2012

You simply draft up a series seed term sheet. In the document it outlines that you will issue stock at a $5m pre-money valuation and in recognition of the additional risks and commitments of early money you have allocated warrants to the first $150,000 of investors. So we’ve reserved the first $150,000 at a $2.5

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

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. Introduction. Accordingly, I thought it would be helpful for founders to discuss these rights and to point out the problems they create for startups. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Startup Company Lawyer

AUGUST 31, 2012

Form of Convertible Security Term Sheet. 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. Form of Convertible Securities Purchase Agreement. Form of Convertible Security.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

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

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. And so forth.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

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. a mix of cash and stock) received by other equity holders in the transaction. Most would agree this is not a fair outcome.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

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). Term Sheets. [link] mattbartus. All forms of creativity are welcome, but I do think it suffers a little bit from the complexity problem. Is there a Jewish network in the Silicon Valley startup scene?

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

www.paulgraham.com

APRIL 28, 2010

One experienced CFO said: The better ones usually will not give a term sheet unless they really want to do a deal. As oneVC told me: If you were talking to four VCs, told three of them that you accepted a term sheet, and then have to call them back to tell them you were just kidding, you are absolutely damaged goods.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Berkonomics

MAY 22, 2014

The PPM does not meet the investing terms and conditions of the angels. The valuation is too high, or the PPM is written to sell common stock when it really should have been a preferred stock deal, or other critical terms are not present in the PPM.

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

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

Business Plan Blog

NOVEMBER 13, 2013

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. 2) Giving equity in the company. About The Author. Links to Download Arushi’s eBook.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

Startup Company Lawyer

JANUARY 9, 2011

Tweaking convertible debt so that common stock (instead of preferred stock) is issued for the conversion discount in order to limit liquidation preference overhang. An example of a term sheet provision to provide for the conversion discount to be paid in common stock and the math involved is below.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

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

ithacaVC

APRIL 10, 2012

They have raised some money from 12 friends and family (let’s assume the friends and family have purchased common stock). After the stock option grant, Mary/Joe might own 65% of the pre-money cap table. Let’s suppose that Joe and Mary are the founders of Startup Z. Hope you all had a great holiday weekend.

Cap Table 49

Cap Table Pre-Money Valuation Stock Options Due Diligence 49

Austin Startup

MAY 17, 2017

Having a VC already on your seed-stage Board can make it harder to get term sheets from outsiders for your Series A. Their interests as an investor are more aligned with the new VCs investing in the Series A than they are with the Common Stock.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48

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

The Entrepreneurial Mind

MARCH 10, 2011

ownership in the Common Stock of the company. But it is also true in detailed technical areas such as: Scaling performance in a cloud hosted app, choosing Ruby or PHP for dev, successfully negotiating angel term sheet, the use of 99 designs to inexpensively build a subscriber base of users, as well as lots more.

Nashville 65

Nashville Tennessee PHP Ruby 65

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. Other incubators may want to set up an option pool.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

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. Dont blow up your Series A term sheet by over-optimizing terms | A View from the Valley - Mar 31, 2010 [.]

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68