Gust

JUNE 7, 2014

5) Senior Preferred Stock and warrants. 7) Junior Preferred Stock and warrants. 9) Common Stock (including any Preferred that converted to Common, any exercised options, and all Founders stock) and Common stock warrants. 2) Secured creditors. 3) Un-secured trade creditors.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

ithacaVC

NOVEMBER 12, 2011

Typically, with convertible debt, the note holder expects the debt to convert into the next equity financing (often a Series A round). So, the debt holder ends up with Series A stock with a $1 value (and usually a 1X liquidation preference, in this hypo $1) for $.85. Conversion Discount vs Warrant Coverage. Here is the article.

Warrant 49

Warrant Liquidation Preference Equity Stock 49

Berkonomics

FEBRUARY 20, 2020

And the process of borrowing money or financing asset purchases can be an eye-opener for those who are not used to today’s lender and seller aversion to grant easy credit. But what happens when the entrepreneur has taken investments from one or more outside investors and may not even own a simple majority of the company’s stock?

Warrant 62

Warrant Liquidity Event Stock Finance 62

Berkonomics

JULY 16, 2020

Venture or angel-financed companies with plenty of working capital sometimes are immune to this working capital need for some time into their growth, but at some point, it will become clear that the cheapest form of finance is not equity in a growing enterprise. It may not be equity. The banks need to be convinced.

Covenant 62

Covenant Dilution Warrant Intellectual Property 62

www.mattbartus.com

DECEMBER 9, 2012

One possibility is to negotiate a higher valuation and offer warrants (i.e., an option to purchase shares in the future at a pre-determined price) to the investor to purchase preferred stock at the Series A price. Warrants. -. In order to exercise the warrants, the VC will need to pay an extra $666,667 into the company (i.e.,

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Scott Edward Walker

APRIL 22, 2012

This post is the second part of a three-part primer on convertible note seed financings. Part 1, entitled “ Everything You Ever Wanted To Know About Convertible Note Seed Financings (But Were Afraid To Ask) ,” addressed certain basic questions, such as (i) what is a convertible note? (ii) What Is a Conversion Discount?

Pre-Money Valuation 72

Pre-Money Valuation Finance Liquidation Preference Founder 72

View from Seed

OCTOBER 15, 2014

Examples of housekeeping include the following list, though not every item will appear every time: Finance: Cash out date, burn rate, 409A valuation, cap table, common/preferred stock dashboard. Finance is mission critical, for instance – it just appears on a recurring basis. Section 6: Current Priorities/Discussion.

Seed Stage 331

Seed Stage Cap Table Metrics Burn Rate 331

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Less than you’ll probably grant your most junior employees in stock options? There were no metrics. So a convertible note was easier.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

www.inc.com

SEPTEMBER 24, 2011

Finance | Tuesdays. Financing a Small Business. Financing A Small Business. Personal Finance. Why Arizona Bay started taking stock from its customers instead of cash. During the first Internet boom, companies that provided services to tech start-ups were all too happy to work for stock. Start-up | Mondays.

Arizona 40

Arizona Equity Iowa Venture Capital 40

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. It also lists out option holders and warrant holders. I am a huge fan of simple cap tables. Seems like a win-win.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Startup Company Lawyer

MAY 4, 2009

If a founder’s company raises more than $50,000 in debt or equity financing, excluding funds from the founder, within 18 months of formation, then the founder must pay a tuition fee of $4,500, which is used to cover the Institute’s expenses in providing the program. Warrants and Bonus Pool.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

The Startup Magazine

JUNE 1, 2023

As a founder, ask yourself – does your business actually warrant VC funding? After all, you’ve likely given your employees stock options which make them part-time business owners as well. Be honest with yourself VCs are now going to be looking closer at margins, cost structures and true sales, and product market fit.

Early Stage 146

Early Stage Los Angeles Silicon Valley Cofounder 146

Both Sides of the Table

MAY 23, 2010

Often when startups who have raised venture capital need another round of financing they will turn to their existing investors to give them money before raising from outsiders. a loan) that is later converted to equity at the time of the next financing. It starts as a debt instrument (e.g. But piers are often counter productive.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

ithacaVC

SEPTEMBER 4, 2011

Here is the latest edition of Finance Fridays from Brad Feld called “Introducing the Cap Table and CTO” Every startup needs someone to be in charge of the Cap Table. That person is typically the inside finance person, but it does not really matter who so long is it is always current.

Cap Table 49

Cap Table Finance Option Pool Warrant 49

ithacaVC

JUNE 28, 2011

Let’s take the following hypo: you are the CEO of Company XYZ, and you just raised $2mm in a Series A financing. In the financing there are 3 institutional investors and 4 high net worth individuals. Let’s assume that future equity financings will be needed as usually is the case.

Warrant 53

Warrant Common Stock Liquidation Preference Institutional Investors 53

Berkonomics

AUGUST 21, 2013

Venture or angel-financed companies with plenty of working capital sometimes are immune to this need for some time into their growth, but at some point it will become clear that the cheapest form of finance is not equity in a growing enterprise. And yet, such a loan does rise and fall with need.

Covenant 61

Covenant Warrant Dilution Intellectual Property 61

Both Sides of the Table

SEPTEMBER 5, 2012

Was Paul Graham right in his “high resolution” financing post? Can you imagine investing in the stock market where your price was determined at a future date and the better that company performed the HIGHER the price you paid for that investment. I want 100% of my stock to convert at that lower price.”

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Growthink Blog

MAY 21, 2014

Most startups and early stage companies that seek outside investors are years away from investor liquidity – either via sale to a strategic or financial acquirer, or far more rarely via a Public Offering of the Company’s stock. Investment Flexibility. Let’s explain this by example.

San Diego 72

San Diego Warrant IRR Investment Bankers 72

Gust

DECEMBER 8, 2011

Enter into agreements between Newco and founders, early contributors, outside advisors or service providers under which they contribute or assign all intellectual property related to the company’s business to Newco in exchange for the issuance of founders’ stock (Common Stock). Make escrow arrangements for restricted stock (i.e.,

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Austin Startup

AUGUST 20, 2017

Startups often hand out shares, options, and warrants for employees and for contractors rendering needed services. Messy cap tables can come back to haunt you when you do a financing or sell the company. Your Cap Table is something that deserves constant care and attention.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

www.instigatorblog.com

OCTOBER 23, 2010

The more that those first employees feel like founders in terms of their ownership, emotional attachment, responsibility and overall understanding of the startup process (including financing , running day-to-day activities, etc.) Jason Penny Stocks stockexplosion I completely agree with you. the better the startup will be.

Equity 41

Equity Employee Startup Vesting 41

Up and Running

AUGUST 8, 2014

Typically, we just don’t have enough money to warrant having a formal marketing budget. He suggested that to take out the limitation of finances, you pretend you have a huge amount of money. Remember that investing in your marketing budget is like investing in a companys stock. Defining your real budget.

Marketing 118

Marketing .Net Warrant Small Business 118

ReadWriteStart

JANUARY 28, 2022

Common stock. The holding of common stock in a company indicates ownership in the corporation. Investors of common stock are eligible for : The choice of the Board of Directors. These characteristics, comparable to those found in the fixed income market, can convert into common stock, call clauses, and other features.

Valuation 108

Valuation Equity Warrant Common Stock 108

abovethecrowd.com

AUGUST 23, 2020

Most potential buyers of stocks are blocked out of the IPO process. I would argue that any first year finance student or computer science student would naturally assume this is how traditional public offerings already work (they would be wrong). as well as the Sponsor warrant coverage. Every thing is negotiable.

IPO 118

IPO Silicon Valley Warrant Matching 118

K9 Ventures

MAY 14, 2011

Common Stock. Convertible Note or Preferred Stock. Convertible Note or Preferred Stock. Preferred Stock. Preferred Stock. Preferred Stock / Warrants. The Series A is now the third round of financing for a company, but the nomenclature hasn’t been changed. Corporate Money. Investment Structure.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Both Sides of the Table

SEPTEMBER 8, 2012

But Paul Graham really did have a point in his “ high resolution fundraising ” post – that there is a problem – particularly in angel financing – with herding cats. We’re either “all in the round together” or we’re not. You can do it with equity & a price.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

VC Adventure

AUGUST 30, 2010

Typically this conversion is at a discount to the next equity round (to compensate the debt investors for their risk) and sometimes carries warrants (same rational) or a cap on the equity price that the debt converts into. Historically convertible debt has been easier (and therefore cheaper) to put in place.

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

Startup Company Lawyer

JANUARY 11, 2010

I seem to be doing a lot of pre-Series A convertible bridge note financings these days. 50%) or warrant coverage are typically more company-favorable than a Series A financing where a valuation is set. If the investor had invested $500K in a Series A Preferred Stock at a $4.5M Assume the angel investor invests $500K.

Angel Investor 39

Angel Investor Valuation Bridge Financing Preferred Stock 39

Professor VC

JULY 25, 2013

In investment parlance, it strictly means that new classes of stock have equal rights with prior classes in terms of liquidation preference, voting rights, etc. Angel Investors Silicon Valley term sheets venture financing venture capital'

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

dondodge.typepad.com

JANUARY 15, 2011

It isnt always possible to have a competitive bidding situation at each financing round so here are some guidelines for funding sources and percentages. Friends & Family can usually raise between $30K and $300K and usually take an interest bearing note that is convertible into stock at the next financing. 5% Managers -.25%

Equity 40

Equity Employee Dilution Valuation 40

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: Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&#

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

www.chubbybrain.com

SEPTEMBER 28, 2011

We did find some specific industry verticals where the model works (some high schools, some boxing and mixed martial arts events, some exclusive conferences), but not enough to warrant a large market and an independent company. Thus, the process of negotiating taking back stock from founders is not rational and inherently very difficult.

Software Review 79

Software Review Startup Technical Review Vesting 79

ConversionXL

NOVEMBER 7, 2022

The data, narrative, and visuals focus on goals that are important to Oxfam’s audience: The right to be heard; Advancing women’s rights; Saving lives; Sustainable food; Fair sharing of natural resources; Financing for development and essential services. The peaks and troughs of trends can warrant further inspection. What’s on the rise?

Audience 109

Audience Campaign North America Demand 109

Both Sides of the Table

OCTOBER 18, 2015

“A surge in prices, more than warranted by fundamentals & usually in a particular sector. More than warranted. Of course they built protection into many of their financings that allows them downside protection against IPOs if the price is lower than the price they paid. .” How elegantly stated.

IPO 150

IPO Venture Capital LP SEC 150