The Startup Lawyer

JANUARY 10, 2011

There’s a lot of advice about (1) how to attract VCs, and (2) how to negotiate a venture capital term sheet. Both sets of advice tend to ignore the gap between an investor’s expression of investment interest and your startup’s receipt of the term sheet.

Term Sheet 64

Term Sheet Pre-Money Valuation Liquidation Preference Option Pool 64

ReadWriteStart

SEPTEMBER 2, 2011

While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. As Steve Blank explained earlier this week on ReadWriteStart from research at The Startup Genome Project : One of the biggest surprises is that success isn't about size of team or funding.

Cap Table 125

Cap Table Term Sheet Liquidation Preference Technical Review 125

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. There were no explanations for all of the confusing details outlined in a term sheet. Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. Drag along rights?

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

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. The Investors’ Right to Walk VC Term Sheets Are Non-Binding. VC Term Sheets Are Conditional.

Term Sheet 76

Term Sheet Due Diligence Liquidation Preference Redemption 76

Early Growth Financial Services

DECEMBER 4, 2014

But do you know what to do once you’re asked to sign a term sheet? Let me say that first, you should have already retained a good startup lawyer. I discussed Change of Control, Reverse Vesting, and Liquidation Preferences in … Continue reading → Equity / Debt / Venture Funding' Congratulations!

Term Sheet 51

Term Sheet Liquidation Preference Vesting Option Pool 51

Both Sides of the Table

JANUARY 21, 2010

If you’re a startup and you don’t have a close relationship with a few law firms you’re really missing one of the most important relationships that any entrepreneur can have. I write about some of the lessons in my post on Startup Mistakes. Every town has firms that focus on startups – find them.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

JULY 3, 2014

As an Angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and then disappear into the sunset. Angel and venture capital money always comes with strings attached, starting with the obvious ones outlined in the term sheet for the deal.

Term Sheet 237

Term Sheet Liquidation Preference Advisory Board Startup 237

Both Sides of the Table

SEPTEMBER 5, 2012

I can’t say it much simpler than this: “What if I took some of the worst, most egregious terms in a standard term sheet and made them the defacto standard in most convertible debt deals? Let me explain it more clearly in equity terms. Convertible Notes Also Can Have Multiple Liquidation Preferences.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Startup Professionals Musings

FEBRUARY 3, 2018

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. Angel and venture capital money always comes with ownership and management implications, starting with the obvious ones outlined in the term sheet for the deal.

Term Sheet 140

Term Sheet Advisory Board Liquidation Preference Portfolio 140

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). This post assumes that you have a basic understanding of Series A financing terms. Dividend preference. Series Seed Financing Documents (by Fenwick & West).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Altgate

OCTOBER 8, 2009

The two most popular posts remain this one on term sheet negotiation and this one on venture debt , although this one on convertible debt is giving them a run for their money. Tips: $75 HOT All-Hands Team Meeting Board Management Tips For Startup CEOs Customer Support 2.0

Term Sheet 39

Term Sheet Technical Review Michigan Liquidation Preference 39

www.readwriteweb.com

DECEMBER 29, 2011

While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Earlier this week on ReadWriteStart, Steve Blank used research at The Startup Genome Project and explained: One of the biggest surprises is that success isn't about size of team or funding.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47

Feld Thoughts

MAY 7, 2012

And even though a term sheet might be four to eight pages long and the definitive documents might be 100 pages or more, other than economics, there are really only three things a VC needs in a deal. Down: Liquidation preference. Up: Pro-rata rights.

Liquidation Preference 143

Liquidation Preference Term Sheet Search Entrepreneur 143

Startup Professionals Musings

AUGUST 16, 2015

As an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. Angel and venture capital money always comes with ownership and management implications, starting with the obvious ones outlined in the term sheet for the deal.

Term Sheet 120

Term Sheet Advisory Board Liquidation Preference Angel Investor 120

The Startup Lawyer

JUNE 9, 2010

A startup’s Series A financing shouldn’t be a large liquidity event or salary payday for the startup’s founders. While a startup typically receives millions of dollars in a Series A, if too much of that $$$ flows guaranteed to the founders, various incentives get out of whack. Case Study.

Salary 99

Salary Term Sheet Liquidation Preference Liquidity Event 99

Scott Edward Walker

DECEMBER 29, 2011

Moreover, I’m publishing an eBook with Hyperink entitled The Startup Law Playbook , which should be available shortly. Legal Checklist for Startups 2. How To Hire A Superstar Engineer For Your Startup 5. How To Launch A Startup And Avoid Ending-Up In Jail 6. What Is A Liquidation Preference?

Antidilution 66

Antidilution Liquidation Preference Term Sheet New York City 66

Altgate

JANUARY 5, 2009

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Layoffs In Venture Capital Be Glad You Are An Entrepreneur! Tips: $75 Killver VC Pitch Deck Not much to learn here. That’s actually about what I would have guessed had I not seen the Google Analytics numbers.

Technical Review 28

Technical Review Due Diligence Term Sheet Liquidation Preference 28

SoCal CTO

JULY 13, 2010

Some great content around the intersection of startups and being a Startup CTO in June this year. This continues my series of posts: Top 29 Startup Posts May 2010 Startup CTO Top 30 Posts for April 16 Great Startup Posts from March There was some really great content in June. liquidation preference.

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

Scott Edward Walker

AUGUST 31, 2011

Thanks, Scott Question We’re a startup based in Palo Alto, and we just received a Series A term sheet for a $725,000 investment. At what valuation and on what terms? But more importantly, a good startup lawyer will also discuss with you the business terms, including the structure of the deal.

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

Berkonomics

MAY 22, 2014

Angels, as group of accredited investors funding startup companies, are assumed to meet a Regulation D exemption for purchasing equity in private companies. I have yet to read a PPM written for a startup company that meets the parameters we angels generally establish for funding new ventures. Raising money'

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

Up and Running

DECEMBER 30, 2015

I’ve been lucky enough to screw up by both funding my startup too early and too late. Founders should pay attention to the liquidation preference in the term sheet to ensure it does not become detrimental to them in a less than favorable exit. See Also: How to Pick the Right Attorney for Your Startup.

Due Diligence 84

Due Diligence Valuation Liquidation Preference Redemption 84

Both Sides of the Table

JULY 19, 2011

Lawyers : So you got your big term sheet signed and you’re now in the drafting. You thought it was going to be as easy as just having term sheet transferred to a longer form document. Trust me, you learn a lot more that way. VCs often do this for reference checking. No “back room deal.&#.

Term Sheet 319

Term Sheet PR Liquidation Preference Stock Options 319

ithacaVC

MAY 4, 2011

“Horse trading” is a bad phrase in the startup/VC community. It typically is used in the context of someone (often a VC) attempting to change deal terms between a signed term sheet and the closing of the investment. But it can be incredibly frustrating and not a good way to build trust. Here is an example.

Term Sheet 49

Term Sheet LP Ratchet Liquidation Preference 49

Feld Thoughts

FEBRUARY 28, 2023

KG companies have decisive tax disadvantages for startups and are, therefore, rarely used in this area. Conversion right: In Germany, there is generally no conversion right entitling the holder of preferred shares to convert them into common shares at any time. BAND) and the Bundesverband Deutsche Startups e.V. GmbH & Co.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

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. Startup outcomes tend to be very binary. An entrepreneur received two Series A term sheets, one lead by an international investor and the other from SH.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

Both Sides of the Table

SEPTEMBER 2, 2009

I took money with a 3x participating preferred liquidation preference with 8% compounded interest annually. Coupled with my participating preferred from 1999 and 2000 I had more than $55 million of liquidation preferences. Many term sheets ensued. year old boy and another one due in 1 months.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed. Home About Matt Client references Contact.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

ithacaVC

APRIL 25, 2012

In my view, starting off a VC relationship by diving into perhaps the most critical economic term is kind of like, well, moving too fast on a first date. So, my suggestion is to not bring up pre-money valuation unless (i) asked by the VC or (ii) the relationship has matured to a point where you can sense that a term sheet is likely.

Valuation 49

Valuation Pre-Money Valuation Liquidation Preference Preferred Stock 49

Scott Edward Walker

JULY 27, 2011

Introduction For the past few months, I’ve been discussing the rights of VC investors in connection with preferred stock financings, including the following: liquidation preferences anti-dilution provisions dividends Board control protective provisions drag-along provisions pay-to-play and pull-up provisions conversion rights redemption rights All (..)

Delaware 49

Delaware Liquidation Preference Redemption Los Angeles 49

Altgate

MARCH 17, 2009

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Global Nuances of Startup Compensation Obama Shoots Down 90% Tax Bracket → Popular Posts Posted on March 17, 2009 by fnazeeri Once again, here is a list of some of the more popular posts on this blog.

Term Sheet 28

Term Sheet Due Diligence Liquidation Preference Dividend 28

Both Sides of the Table

SEPTEMBER 8, 2012

I recently wrote about my views that startups rounds should be priced. 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 simply draft up a series seed term sheet.

Pre-Money Valuation 294

Pre-Money Valuation Finance Warrant Liquidation Preference 294

abovethecrowd.com

APRIL 20, 2016

In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” Next came Rolfe Winkler’s deep dive “ Highly Valued Startup Zenefits Runs Into Turbulence. ”

IPO 40

IPO Term Sheet Valuation Silicon Valley 40

Both Sides of the Table

FEBRUARY 14, 2016

.” “Mark has a vested interest in talking down valuations of startups.” When I was an entrepreneur there was no public information about how term sheets worked or how investors thought. In 2015 in the US there were $77 billion written into startup tech companies. goes into a startup. What hogwash.

Valuation 150

Valuation Down Round Startup Later Stage 150

Startup Company Lawyer

JANUARY 9, 2011

Convertible debt with a price cap seems to be the preferred structure for early-stage financings. Over the last 12 months, I’ve noticed a trend where early-stage startup companies raise seed financings of between $250K and $1M using a convertible note with a price cap.

Liquidation Preference 57

Liquidation Preference Preferred Stock Finance Common Stock 57

Austin Startup

APRIL 1, 2017

out of state VCs Don’t rush a term sheet In assessing financing terms and interacting with their lead investors, most founders instinctively focus on two core things: economics and control. Do not take that selection lightly. Background Reading: How to avoid “captive” company counsel Local v.

Term Sheet 48

Term Sheet Institutional Investors Technical Review Lead Investor 48

Life Beyond Code

SEPTEMBER 27, 2011

Any startup that wants to fast-track to being ‘Silicon Valley VC ready’ should participate in this program.”. When we were looking to talk to investors, Sramana introduced us to multiple investors and acted as an advisor helping us to navigate complex term sheet clauses like tranche financing and liquidation preferences.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116