Scott Edward Walker

JUNE 9, 2019

For example, if an investor owns 20% of the equity of a startup on a fully-diluted basis following the closing of a Series A round, it will have the right to purchase 20% of the shares of the preferred stock issued in the subsequent Series B round. This is a huge red flag and founders should push back very hard.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. 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.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

Agile VC

APRIL 17, 2011

At the end of the day Kayak’s playing a key role in the online travel process, but it appears more of the revenue comes from filling top of the conversion funnel rather than the middle or bottom of it. One can infer valuations based on per share prices of preferred stock and oustanding common shares (~5.3M as of 12/31/09).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Scott Edward Walker

APRIL 9, 2012

ii) why are convertible notes issued instead of shares of common or preferred stock? Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) ii) what happens if the maturity date is reached prior to the note’s conversion to equity?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Gust

OCTOBER 5, 2011

In case it isn’t clear by now, angel investors aren’t in the business of making risky early stage investments in order to earn 6% interest on their money, or even 10%— the upside is all in conversion to equity—so the interest rate isn’t a major point of negotiation. This paragraph is the heart of the whole deal.

Finance 79

Finance Preferred Stock Term Sheet Early Stage 79

Both Sides of the Table

SEPTEMBER 5, 2012

This time by the efforts of Adeo Ressi to introduce a new kind of structure called “ convertible equity.” My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Business Plan Blog

NOVEMBER 13, 2013

Since investment in a startup is risky and most people are reluctant to contribute funds, startup entrepreneurs can use different ways to make funding from FFF look less risky. Convertible Debt” is a loan, which is automatically converted to equity at maturity or upon the closing of a round of financing. 3) Giving non-voting stock.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

Gust

OCTOBER 21, 2011

This week we move on to something near and dear to the hearts of entrepreneurs and investors alike: The exit, more formally known as a “ liquidity event.” In Parts II and III, we looked at commonly used mandatory and voluntary conversion language in convertible notes. Most would agree this is not a fair outcome.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. 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.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Both Sides of the Table

APRIL 14, 2010

It’s meant to be a bit provocative but the reality is that I give this advice to entrepreneurs all the the time and I usually leave the “e&# off of the end. I normally offer this advice in the capacity of really wanting to help entrepreneurs so please bear with me. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

Both Sides of the Table

MARCH 21, 2010

As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. I’ve already made clear that I think raising equity from “strategic money&# is an oxymoron. Common Mistakes.

Warrant 298

Warrant Dilution Startup Stock Options 298

Tim Keane

JANUARY 12, 2010

Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. Term-sheets and Valuations: Thinking about Negotiations.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Austin Startup

OCTOBER 27, 2017

Good entrepreneurs and advisors know that. Out of State VCs When you’re not CEO Material Preferred Stock v. Common Stock Ask the Users Because we’re known as Startup/VC lawyers who don’t represent VCs (just companies), I often get asked about my thoughts on “founder friendliness.” Background reading: Local v.

Founder 48

Founder Cap Table Preferred Stock Common Stock 48

Tim Keane

APRIL 12, 2006

Ten questions the entrepreneur should ask the (prospective) investor. If they’re making it as part of a group that the entrepreneur likes, fine. If they are “solo,” though, the entrepreneur will want to know a lot about their attitudes and expectations, especially when things go wrong. » April 12, 2006.

Entrepreneur 60

Entrepreneur Valuation Sweat Equity Common Stock 60

Professor VC

DECEMBER 26, 2012

If you are entrepreneur that isn't in a position for Series A, find other financing sources and/or figure out how to bootstrap to cash flow breakeven or in Jason's words "put on your big boy undies". Is it a good thing that so many entrepreneurs are able to get $250K - $1.5M These are part of the entrepreneurs' education.

Finance 48

Finance Angel Investor Private Equity Preferred Stock 48

Up and Running

MAY 23, 2016

To give you a better idea of what entrepreneurs in this industry are thinking about during each phase of the startup process, I interviewed SaaS entrepreneurs from all over the world, including our own COO Noah Parsons. Practical Market Research Resources for Entrepreneurs. How to Write a Business Plan in Under an Hour.

Software Review 74

Software Review Software Delaware Forecast 74

Both Sides of the Table

SEPTEMBER 8, 2012

If you do a capped note it’s bad for the entrepreneur. It has both a “full rachet” and “multiple liquidation preferences.” Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. You can do it with equity & a price. Price the round.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Gust

OCTOBER 26, 2011

The purchase agreement sets forth the terms of the investment, often including the mandatory and voluntary conversion provisions we’ve covered in this series, as well as customary representations and warranties of the Company and the investors. See discussion of amendments below.) merger or acquisition).

Finance 79

Finance Term Sheet Covenant Accredited Investor 79

techcrunch.com

SEPTEMBER 2, 2012

Convertible Equity, A Better Alternative To Convertible Debt? As a refresher, a convertible note is a loan that automatically converts into equity upon the closing of a Series A round of financing. In the end, Ressi says that Convertible Equity allows startups and investors to have their cake and eat it too. Smartphones.

Equity 87

Equity San Francisco Technical Review Angel Investor 87

www.vccafe.com

MARCH 11, 2013

A group of Seedcamp entrepreneurs started a startup tools wiki for that purpose, and we thought it would be well suited here. GetSatisfaction - conversations between companies / customers. YCombinator Series AA Equity Financing Documents. List of Angel/SuperAngel Investors for entrepreneurs. Founder Equity Issues.

Software Review 53

Software Review Technical Review Startup 53