Hunter Walker

SEPTEMBER 29, 2022

Starting a venture capital blog post with 1970s country music lyrics is pretty uncommon, but so is writing about when and why an investor might choose to sell equity before the company exits. We’re aligned with the founders and the rest of the cap table until we aren’t.

Venture Capital 122

Venture Capital Cap Table LP Equity 122

Both Sides of the Table

APRIL 6, 2020

There are some business people who think this is ethically wrong for a VC-backed business with a highly-educated founder and there are also likely to be some populist outcries that the money should have been reserved for Main Street workers and not tech workers. The NVCA (National Venture Capital Association) Guidelines are below.

Programming 279

Programming Affiliate SBA Government 279

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. Under this category, you have the angel investors who would invest their own money and Venture Capital or VC firms, who manage funds aimed towards specific startup sectors and stages. Equity investors. Debt investors.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Gust

MAY 24, 2012

Some commentators have suggested this is the wave of the future, signifying a shift in the balance of power from investors to founders of the relatively small, elite group of growth companies that make it to public markets. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

Both Sides of the Table

APRIL 14, 2010

If you want to raise venture capital more easily the advice could be quite practical and counter-intuitive. Many companies that are raising B or C venture capital rounds right now raised their initial money in 2005-2008. Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Startup Company Lawyer

AUGUST 31, 2012

” As a result, Ted introduced the Series Seed preferred stock documents as an alternative to convertible debt for early stage investments. ” However, I believe that YC realizes that having debt outstanding that may need to be repaid is not a good situation for founders. The problem.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

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

Scott Edward Walker

JULY 7, 2011

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. What Are the Key Issues for Founders? There are several issues founders should focus on in connection with redemption rights.

Term Sheet 49

Term Sheet Redemption Venture Capital Preferred Stock 49

Startup Professionals Musings

SEPTEMBER 26, 2015

Here is a summary of the key terms to expect on the term sheet, or the contract between the founder and investor: Consideration given for the money invested. For later investments, the price is equity, with a percentage of the owner stock to be assigned to the investor. Type of stock assigned to the investor.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

Berkonomics

FEBRUARY 3, 2022

You may recall my story of the company that was forced to grow to death by a famous venture capital investor expecting massive profit or nothing, with no expectations in between.). Of course, you will find yourself in opposition to your investors and some of most of your board members if you do this after taking outside investment.

Liquidity Event 62

Liquidity Event Preferred Stock Dividend Equity 62

Up and Running

MAY 23, 2016

“If you can fix a problem for someone and do it better, quicker, and/or cheaper than your competitor, you’re off to a good start.” – Gabriel Kuperman, founder and CEO of CuePin. We created UpKeep to fill this void—a cloud-based solution that was affordable for any size business.” – Ryan Chan, founder of UpKeep.

Software Review 74

Software Review Software Delaware Forecast 74

Scott Edward Walker

JUNE 9, 2019

Accordingly, I thought it would be helpful for founders to discuss these rights and to point out the problems they create for startups. This is a huge red flag and founders should push back very hard. In short, super pro rata rights are another example of investors trying to take advantage of inexperienced founders.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Scott Edward Walker

APRIL 9, 2012

Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. ii) why are convertible notes issued instead of shares of common or preferred stock?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

YoungUpstarts

JUNE 26, 2020

Sangha was a graduate of University of Pennsylvania and his first venture capital investor turned out to be an alumni. Setting aside the issues of valuation of common stock vs. preferred stock, what I really didn’t understand was that a valuation is a set of expectations. Who is in your tribe? In the U.S.,

Finance 205

Finance Silicon Valley Valuation Startup 205

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). If you don’t, please educate yourself on this site, Venture Hacks and the term sheet series by Brad Feld/Jason Mendelson, among other places. under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

JULY 25, 2011

When I first started as a startup CEO in 1999 there were no guides on raising venture capital. Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. Or what “participating preferred&# stock is and how it can screw you.

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

www.vccafe.com

MARCH 11, 2013

Venture Capital Cafe > Startup Resources (Updated Mar 2013). ” Hackernews list of “Tools of the Trade” for startups - includes over 150 SaaS tools used by startups, and over 150 comments with interesting insights from founders. National Venture Capital Association â?? Raising Venture Capital.

Software Review 53

Software Review Technical Review Startup 53

www.mattbartus.com

SEPTEMBER 24, 2011

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. First, you’d probably want them to receive common stock, not preferred stock (which is the likely next round). Cooley Report Reviews Second Quarter Venture Capital Financing Trends.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

abovethecrowd.com

FEBRUARY 24, 2015

In a February 6th article in Business Insider , Allyson Shontell discovered that a mere four months after adding $150 million to a total of $330 million in invested capital, the founder and CEO disclosed to its employees that “we have spent $200 million and we have not proven out our business model.”

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

K9 Ventures

MAY 14, 2011

The limited partners may themselves run the gamut from individuals, family offices, venture capital funds to institutional LPs. This now means that they will slowly start behaving less like Angels, and more like institutional venture capital funds. Common Stock. Convertible Note or Preferred Stock.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

www.quora.com

JANUARY 16, 2011

Find Questions, Topics and People Add Question Add Question Venture Capital Venture Capital Term Sheets Startups Term Sheets What are examples of good startup term sheets? Ryan Spoon , Founder, Former CEO of beRecruited.co. I have used this myself (slight modification): [link] mbinator.com/seriesaa. org/index.php?op.

Term Sheet 41

Term Sheet Startup Angel Investor Wiki 41

The Startup Lawyer

JUNE 22, 2010

For this article, let’s assume this equity is the Series A Preferred Stock purchased by a venture capital fund. For example, if a venture capital fund purchases Series A Preferred Stock at $1.00 Convertible Note Discount. As a sweetener to the angel investor (i.e.,

Pre-Money Valuation 82

Pre-Money Valuation Angel Investor Preferred Stock Valuation 82

The Startup Lawyer

MARCH 1, 2010

The board is set up to consist of 3 directors: 1 director elected by the common (founders); 1 directors elected by the preferred (investors); 1 “independent&# director (i.e., 2) Series Seed Stock Preferred Stock Purchase Agreement. Tags: Preferred Stock documents lawyer seed funding.

Preferred Stock 79

Preferred Stock Term Sheet Redemption Registration Rights 79

Startup Company Lawyer

MARCH 12, 2009

Any company that raises venture financing will need to be a C corp in order to issue preferred stock. If founders want the benefit of flow through tax treatment with respect to losses prior to an outside financing, an S corp election may make sense as long as there are no entity or non-U.S. citizen/resident stockholders.

LLC 61

LLC Stock Options Preferred Stock Stock 61

Gust

OCTOBER 3, 2011

If a company is appropriate for angel financing , for example, it is highly unlikely that it would also be in a position to raise venture capital, and vice versa. 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 +/- $1.5m

Finance 70

Finance Venture Capital Intellectual Property Early Stage 70

Both Sides of the Table

AUGUST 30, 2010

Funnily enough I just answered this question yesterday on Quora when somebody asked, “Why would an early-stage investor specifically NOT prefer a convertible note structure to straight equity (e.g. a priced/valued preferred stock financing)?&#. Tags: Raising Venture Capital Startup Advice.

Equity 319

Equity Early Stage Angel Investor Valuation 319

Growthink Blog

MAY 10, 2012

If it's not your plan to get venture capital down the road, then you'll probably stop in Stage 2-receiving enough funding to boost your marketing, sales, and infrastructure to grow organically from there to the point where you are satisfied or ready to sell. So during this round, you'll be testing what works and what doesn't.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

thestartuplawyer.com

FEBRUARY 24, 2010

He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder. You can start by examining every aspect of the co-founder relationship. And that’s a big mistake.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Growthink Blog

APRIL 7, 2010

million from three individual angel investors and one early-stage venture capital fund. For those of you who don't understand the term "Series A," the Series A round is the name given to your first significant round of venture financing.

Angel Investor 54

Angel Investor Preferred Stock Venture Capital Common Stock 54

Scott Edward Walker

SEPTEMBER 14, 2011

Introduction This post originally appeared in the “ Ask the Attorney ” column I am writing for VentureBeat ; it is part of my ongoing series regarding venture capital term sheets. What Are the Key Issues for Founders? Second, founders should only agree to pay the investors’ legal fees and expenses if the deal actually closes.

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76

The Startup Lawyer

MARCH 1, 2010

The board is set up to consist of 3 directors: 1 director elected by the common (founders); 1 directors elected by the preferred (investors); 1 “independent&# director (i.e., 2) Series Seed Stock Preferred Stock Purchase Agreement. Tags: Preferred Stock documents lawyer seed funding.

Preferred Stock 40

Preferred Stock Term Sheet Redemption Registration Rights 40

Gust

OCTOBER 5, 2011

Mandatory Conversion : The Notes and any accrued interest will be converted into the Company’s next issued series of preferred stock resulting in new money of not less than $1,000,000 (an “ Eligible Financing ”) at a discount to the per-share price of such preferred shares of 25% (the “ Conversion Price ” ).

Finance 79

Finance Preferred Stock Term Sheet Early Stage 79

Tim Keane

JANUARY 12, 2010

  I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] These include: ·       Vesting of Founder Stock.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

ithacaVC

FEBRUARY 23, 2011

The MCOP can serve a critical role as founders and other management team members are diluted down by rounds of financing or if their equity is not in the money. As the investors’ aggregate liquidation preference (ALP) increases typically the need for a MCOP also increases. A few key points to consider: 1.

Liquidation Preference 55

Liquidation Preference Management Preferred Stock Dividend 55

Professor VC

JANUARY 17, 2008

If my math is correct, this is approximately a 31% IRR, which has to beat individual angel investments on aggregate and venture capital returns over the period of the study (1990-2007). There needs to be enough equity to go around for founders, early investors, later investors, and employees. return on investment after 3.5

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

abovethecrowd.com

MAY 20, 2013

Private companies typically have capitalization structures that are very complex. There are common stock, common options, and as many as three to five different layers of preferred stock, each with a specific liquidation preference. 3) Investor/Founder Mindset Challenges.

Merger 53

Merger Institutional Investors Liquidation Preference Preferred Stock 53

www.paulgraham.com

APRIL 28, 2010

I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. The reason is thatinvestors need to get their capital back.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76