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

Growthink Blog

MAY 10, 2012

When seeking equity investments, the source of capital is, for the most part, tied to the stage of capital being raised. You see, equity capital is raised in stages or rounds. Mezzanine Financing Most companies that raise equity capital and are eventually acquired or go public receive multiple rounds of financing first.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

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

Let’s dive in, taking it from the top: Type of Security : Convertible Promissory Notes, bearing interest at a simple interest rate of 8%. At least one well-known Silicon Valley venture accelerator is using a document referred to as a “ convertible security ” rather than “convertible promissory note.”

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

Convertible Debt” is a loan, which is automatically converted to equity at maturity or upon the closing of a round of financing. Various terms such as price cap, discount, conversion to equity, etc., maturity date is reached and the startup is unable to secure a round of financing, note holders can force the startup into bankruptcy.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

Scott Edward Walker

MAY 15, 2012

What Happens If a Startup is Acquired Prior to the Note’s Conversion to Shares of Preferred Stock? As discussed in part 1 , in the context of a seed financing, a convertible note is a loan that typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing.

Finance 64

Finance Founder Accredited Investor Preferred Stock 64

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

Business Plan Blog

APRIL 10, 2012

According to their blog, “a convertible note is short-term debt that converts into equity. In the context of a seed financing, the debt typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing.” and (iii) what are the advantages of issuing convertible notes? Interested?

Finance 40

Finance Preferred Stock Equity Stock 40

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

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). Bill Payne has been actively involved in angel investing since 1980, funding over 50 companies and mentoring over 100 more.

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

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. We’ll revisit some of these in future posts.

Stock Options 188

Stock Options SEC Stock Government 188

Agile VC

FEBRUARY 28, 2013

increasing dividends or issuing preferred stock). Hungary probably wouldn’t sell their sovereignty and entire economy for 1x sales, but Apple has no debt so they could probably lever the deal and borrow money on top of $137 billion in equity.

Hungary 168

Hungary Dividend Vertical Preferred Stock 168

Up and Running

SEPTEMBER 20, 2021

The use of a cap table for a company comes into play when it has to track the total amount of shares, the value of shares, and the equity ownership of all the shareholders. The data of the company, such as debt and the company’s equity ownership, is laid out with the help of a cap table. Authorized shares. Common shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Board Effect

MAY 10, 2019

It’s important to note that the structure and contents of a cap table are unique to how a company has chosen to divide its equity. Cap tables are also used to model waterfalls and what-if scenarios, giving companies a better understanding of how different events might impact shareholder payouts and equity dilution.

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

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. You can do it with equity & a price. ” If you remember the three rules of sales : it’s. why buy anything? why buy me? why buy now? The last one kills all deals. Price the round.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Up and Running

MAY 23, 2016

Delaware law gives preferred stock investors of a corporation certain voting rights and control over the corporation. You might also be giving investors too much equity early on, as the risk is extremely high for them in the beginning stages of growing a SaaS company.”. Delaware permits a single-member board of directors.

Software Review 74

Software Review Software Delaware Forecast 74

Gust

OCTOBER 3, 2011

Once in, this money stays in, and is part of what makes up your Founder’s Equity (along with your work and your intellectual property.). From $25,000 – $150,000 you will likely be rounding up friends and family to put in the first outside cash on top of yours. From +/- $1.5m

Finance 70

Finance Venture Capital Intellectual Property Early Stage 70

Gust

OCTOBER 26, 2011

When a company is asked to make legal representations about its standing, prior equity and debt issuances, corporate governance formalities and so forth, if taken seriously, matters of “deferred maintenance” often surface and must be handled before closing.

Finance 79

Finance Term Sheet Covenant Accredited Investor 79

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. For example, our hypothetical startup never spent more than halfof one round before securing the next.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

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

Altgate

MARCH 16, 2009

.   In India and China there is no preferred stock.  This one really surprised me but apparently in India and China VCs don't get a different class of stock with special rights and privileges. "  I wonder if these have been tested in any courts…anyone had personal insight into that?

Global 28

Global India United Kingdom 28

www.vccafe.com

MARCH 11, 2013

No need to worry about security and such. YCombinator Series AA Equity Financing Documents. Founder Equity Issues. Venture Hacks equity section. Legal, Equity, etc. Company Guides : They specialize in helping high growth companies and entrepreneurs seeking corporate finance advice and private equity investment.

Software Review 53

Software Review Technical Review Startup 53