Gust

NOVEMBER 2, 2014

Professionals maintain that there is plenty of money and equity for qualified startups, and funding marginal startups via any source will only make more people unhappy. But safely seeking equity investments from the crowd via the Jobs Act of 2012 is problematic and has still not been defined.

Non-disclosure Agreement 160

Non-disclosure Agreement Intellectual Property Accredited Investor Equity 160

Gust

NOVEMBER 11, 2011

Or the in-kind winning includes legal work or management consulting, but the startup that wins has its own providers. Usually these term sheets involve convertible notes, which are supposed to convert to equity at the next round of financing, like when the serious venture capitalists do a Series A. That made a huge difference.

Software Review 79

Software Review Term Sheet Due Diligence Angel Investor 79

Gust

DECEMBER 6, 2012

Those names and faces and backgrounds that turn up in pitches and business plans might be deep and important relationships, somebody with options or equity who is going to be helping for the long term; or meaningless fluff, somebody who agreed once to have his or her name appear, but really does nothing. . Equity is forever.

Equity 165

Equity Startup Capitalization Table Naming 165

Gust

APRIL 23, 2014

From a completely biased perspective, I’d nominate the nascent and not yet completely visible rise of online equity investing platforms. While Gust is generally flying under the radar, and currently accounts for an infinitesimally tiny fraction of the marketplace, the actual numbers may be a bit surprising.

Angel Groups 127

Angel Groups Accredited Investor Private Equity Deal Flow 127

Gust

AUGUST 10, 2014

Here are some basic rules of thumb that every Angel or venture capital equity investor uses, to help you anticipate their reactions. According to a recent Dow Jones VentureSource report, the average time to liquidity of an equity investment in a startup is now about five years. Build a path to 10x return.

Liquidity Event 176

Liquidity Event Equity Venture Capital Merger 176

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

Gust

JUNE 7, 2014

Also, as Ben Black mentioned in his answer, in some cases the investors may choose to provide an incentive to the management team, in order to ensure that the sale goes through, and quickly. Management carve-out (if any). Management carve-out (if any). 2) Secured creditors. 3) Un-secured trade creditors. 2) Secured creditors.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Gust

JANUARY 4, 2012

Entrepreneurs: if you’re looking seriously at angel investment, and you have the kind of product-market fit and management experience investors will like, you need to take a good look at convertible notes. Do yourself and the investors you want to talk to a favor: take a few minutes and do some homework on this issue.

Angel Investor 114

Angel Investor Valuation Angel Groups Equity 114

Gust

AUGUST 9, 2014

CluelessCo is an internet startup company seeking $2 million of equity financing to fund our company for at least one year. Web-based Database Management System. Take your choice (these are both real, honest-to-God pitches, and I’ve got the originals in my possession): Contestant A. Web-based Productivity Applications.

Startup 131

Startup Database Open Source Equity 131

Gust

JULY 29, 2012

Managing employees is a whole separate discipline, and most true entrepreneurs aren’t very good at it anyway. Barter your skills or equity for services you need. An example would be getting free office space by agreeing to be the property manager for the owner. Don’t hire any employees. Consultants don’t need any inventory.

Bandwidth 155

Bandwidth Bootstrapping Equity Startup 155

Gust

DECEMBER 7, 2014

Even a small investor in the early days will take a large equity percentage, due to that pesky valuation challenge. Managing investors is a distraction from your core business. To investors, having no money indicates that you may not have the discipline to manage their money, and manage a tough business process as well.

Bootstrapping 191

Bootstrapping Entrepreneur Startup Burn Rate 191

Gust

DECEMBER 8, 2011

Readers can anticipate my next point in continuing the analogy: It makes no more sense for a non-lawyer to prepare fundamental legal, governance, equity and intellectual property documents than it would for a patient to self-diagnose and begin taking prescription-strength antibiotics or other medications. Newco, Inc.”) Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Gust

JULY 12, 2012

It doesn’t give you more cash compensation, more equity ownership or more direct control over the operating business. If you are going to be a true co-founder (and 20% equity sounds like it), sharing over-all decision making about company direction, strategy, financing, staffing, etc.

Cofounder 107

Cofounder Founder Warrant Equity 107

Gust

DECEMBER 8, 2013

The intent of this question is to determine the level of commitment of founders, both cash and “sweat equity,” and how much others have already invested into this plan. But don’t let management divert you with comments on your failure to understand “the vision and the big picture.” How much “skin” is already in the game?

Due Diligence 174

Due Diligence Sweat Equity Intellectual Property Burn Rate 174

Gust

DECEMBER 6, 2011

It is important that the management team of new companies understand the capital food chain, acknowledge these gaps in capital sources and design fundraising strategies accordingly. The funding gaps can create a bumpy fundraising road for entrepreneurs.

Angel Investor 179

Angel Investor Venture Capital Valuation Software Engineering 179

Gust

JULY 18, 2012

For startups, it’s also important to understand that Board approval is required for a corporation to issue any new shares of stock or other equity instruments such as stock options. For that reason, approval of the latest employee stock option grants recommended by the CEO is a routine action item at most startup Board meetings.

Stock Options 188

Stock Options SEC Stock Government 188

Gust

JANUARY 5, 2012

Since the IPO market has been in the doldrums for most of the past decade, high-profile private companies have chosen (or been forced) to stay private while raising huge sums of money from VCs and other private equity sources. Raising $1000 each from 1000 investors would surely seem to violate current SEC regulations.

SEC 131

SEC Angel Groups Technical Review Private Equity 131

Gust

OCTOBER 20, 2011

Individual accredited investors in typical angel deals put personal capital at risk for an equity share of growth-oriented, start-up companies. For this round of investment, the angels collectively purchase 20-40% of the equity of the company and are seeking a return on investment of 20-30X in a period of five to eight years.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146

Gust

OCTOBER 29, 2014

As the primary international platform for angel investing, Gust is also used by over 200,000 startups to manage their investor relations, making the industry increasingly efficient. Subject to specific rules and dollar limits (10% of your income in aggregate for all investments per year, etc.)

Accredited Investor 157

Accredited Investor Securities and Exchange Commission Technical Review Due Diligence 157

Gust

OCTOBER 6, 2011

There’s only one catch though: it takes a complete marketer to make that kind of contribution, and the skill set of a complete marketer goes way beyond, let’s say, managing a PPC campaign. In other words, the role of marketing, in addition to finding customers, is to help create a product that will barely need marketing.

Acquisition 87

Acquisition Marketing CPA PPC 87

Gust

DECEMBER 28, 2011

Without explaining why the average venture capital firm is managing larger funds today than a decade ago, let me describe how this change has impacted the startup funding landscape. With more money to invest per principal, venture capital has chosen to invest more money per round of investment.

IPO 153

IPO Venture Capital Entrepreneur Angel Investor 153

Gust

NOVEMBER 23, 2011

The law would have the effect of allowing companies to stay private longer, deferring the significant expense, management distraction and public disclosure of financial and operating data involved in the IPO process. targets the Exchange Act requirement that is reportedly forcing Facebook to go public in early 2012.

IPO 110

IPO SEC Prospectus Intellectual Property 110

Gust

SEPTEMBER 21, 2014

Often I find that experienced investors scan ahead to the management page of a business plan, even before they read the product description. They should have a track record of originating and closing equity deals, and should have a long list of potential financing sources that are willing to take their call.

NDA 147

NDA CPA SEC Startup 147

Gust

JUNE 28, 2012

But I’m sure there will be many, many stories of all kinds once the final provisions go into effect in January, and it will take quite a while for this all to shake out.

Common Stock 143

Common Stock Equity Stock Revenue 143