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. As a result of this risk, some people like Adeo Ressi, have declared that 2011 will be the “ year of the startup default.” The problem.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Startup Professionals Musings

JANUARY 4, 2020

Ancillary objectives, like retiring existing debt, buying a building or paying salaries to people with equity ownership will not get traction. Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection. How much equity ownership are you willing to offer?

Startup 337

Startup Preferred Stock Exit Strategy Equity 337

Both Sides of the Table

SEPTEMBER 5, 2012

” I applaud all efforts by people to take on this issue and especially be Adeo who – let’s be honest – was really the first champion of trying to make the VC world more transparent by launching TheFunded, which didn’t exactly endear him to VCs initially. We’re back to discussing convertible debt again.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Startup Professionals Musings

MARCH 14, 2020

Experienced entrepreneurs understand investor expectations of Board representation, preferred stock, and payments based on interim milestones. Investors invest in people, often more so than in the product. Dysfunctional or non-functional team members.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Seed Stage 308

Steve Blank

APRIL 26, 2022

Some even insisted that all prior preferred stock had to be converted to common stock. You’re burning the very people who were your early supporters. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose. Founders rationalize it’s good for their employees.

Cram Down 404

Cram Down Founder Venture Capital Recapitalization 404

Both Sides of the Table

JULY 29, 2010

People assume that I’m biased because I’m a VC and think you should always get the highest valuation possible. People buy companies for 3 primary reasons: 1) they want the management team / talent 2) they want the technology or 3) they want the market traction (revenue, customer base, profits, etc). A: It’s not best.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

YoungUpstarts

AUGUST 25, 2015

splitting profits), those allocations are taxed as personal income (for regular people) and corporate income (for corporations), but not as income for the LLC itself. Owners of corporations also pay taxes when they are paid dividends or profit from sale of the stock, which is why it is common to say that corporations are “double-taxed.”

LLC 100

LLC Technical Review Software Review Limited Liability Company 100

Startup Professionals Musings

JANUARY 29, 2018

Unfortunately, in my years since as a small business advisor, I have seen too many founders squander this asset through a lack of understanding of some basic legal and operational issues, or by handing out nominally “free” stock to the wrong people at the wrong time. Negotiate an upgrade from common shares to preferred stock.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

Up and Running

SEPTEMBER 20, 2021

And as the company grows, it brings on new people and may decide to issue stock options to attract new staff and funding from investors. Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. Because then the business would need to create awareness for the category, educate people, and then create awareness of the product. Equity investment is the most popular and most talked-about avenue for startup funding.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Up and Running

AUGUST 28, 2019

This option takes greatest advantage of your knowledge of your state and its laws, the helpful local people you know, and the ability to physically visit government offices if needed. It sure sounds official, but your board of directors is just a group of people who are legally required to act in your company’s best interest.

Delaware 83

Delaware Stock Nevada Technical Review 83

Scott Edward Walker

APRIL 9, 2012

ii) why are convertible notes issued instead of shares of common or preferred stock? 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. Friends and family are also often issued shares of common stock.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

YoungUpstarts

JUNE 26, 2020

If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. Some people blame it on Justin Timberlake (playing Sean Parker) in the movie The Social Network, who famously said that one million wasn’t cool, one billion was. Well not, wrong exactly.

Finance 205

Finance Silicon Valley Valuation Startup 205

Berkonomics

FEBRUARY 3, 2022

There are clauses in preferred stock investment agreements allowing the investor in many cases to “put” the shares back to you at the purchase price plus dividends or more after a period, usually five years, if no effort is made to find a buyer or begin the IPO process. More advantages to not taking the money at all.

Liquidity Event 62

Liquidity Event Preferred Stock Dividend Equity 62

Lightspeed Venture Partners

OCTOBER 7, 2012

Week three’s breakdown covered topics like how hard momentum is to turn around, and how participating preferred stock works. Their returns are likely to be similar to those of charitable giving, where they will be paid back by knowing that they made a difference in peoples lives, but not in a cash-on-cash return.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Both Sides of the Table

SEPTEMBER 8, 2012

I’m not sure why people don’t see that. It has both a “full rachet” and “multiple liquidation preferences.” Since 2009 I have been counseling people to offer discounts to the first angel investors. And no matter how rich people are – they still want a good deal. why buy anything?

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

VC Cafe

JUNE 11, 2011

Some of the posts that got my attention this week… 5 Ways To Raise Funds for Your Startup – Mashable brings a good reminder on the ways to raise funding: friends/family/fools, incubators, convertible debt, preferred stock and VC. It was good to see Editd, a London based fashion analytics company on the list.

Preferred Stock 84

Preferred Stock Incubator Stock Analytics 84

Startup Professionals Musings

AUGUST 1, 2016

Experienced entrepreneurs understand investor expectations of Board representation, preferred stock, and payments based on interim milestones. Investors invest in people, often more so than in the product. Dysfunctional or non-functional team members.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

Feld Thoughts

FEBRUARY 23, 2019

What I bought was three shares of Cities Service preferred stock. During the two 77-year periods prior to 1942, the United States had grown from four million people – about 1?2 The year was 1942, I was 11, and I went all in, investing $114.75 I had begun accumulating at age six. I had become a capitalist, and it felt good.

Preferred Stock 108

Preferred Stock United States Dividend America 108

Startup Professionals Musings

MAY 18, 2015

Otherwise, people with no ongoing effort (“free riders”) will own the value growth that you are adding after their departure. Facilitate an upgrade of founder’s common to founder’s preferred. Minimize your own loss of ownership as major investors contribute.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Startup Company Lawyer

MARCH 14, 2010

To differentiate it from typical “Series A&# preferred stock, which comes with certain expectations with regard to rights. There is no real rule to what a particular series of preferred stock is called. Why will or why won’t people adopt the Series Seed documents? Why is it called Series Seed?

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Professionals Musings

MARCH 7, 2015

Ancillary objectives, like retiring existing debt, buying a building or paying salaries to people with equity ownership will not get traction. Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection. How much equity ownership are you willing to offer?

Preferred Stock 120

Preferred Stock Exit Strategy Equity Angel Investor 120

ithacaVC

DECEMBER 22, 2012

And there are some angel investors that know that even with “light” preferred stock terms (sometimes called Series Seed), there is enough control built into the terms of the preferred stock that the company is still mostly restricted when it comes to making key decisions.

Seed Stage 82

Seed Stage Preferred Stock Founder Angel Investor 82

K9 Ventures

MAY 14, 2011

They provide additional value add in the form of coaching and mentorship, and most of all access to a network of other entrepreneurs and smart people – that to me is really the real value of being involved with an incubator / accelerator. Common Stock. Convertible Note or Preferred Stock. Preferred Stock.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Scott Edward Walker

SEPTEMBER 21, 2011

Spend a ton of time meeting people, talking with them about what they are working on, and sharing what you are working on. Over time you will find people with whom your idea resonates and they will introduce you to folks with whom they are close. What you need to do is build relationships from the bottom up.

Preferred Stock 45

Preferred Stock Angel Investor Entrepreneur Common Stock 45

www.mattbartus.com

SEPTEMBER 24, 2011

posted Feb 3 in Equity , People issues. People tend to underestimate how much record keeping is involved with managing employees and consultants, and this just adds an unacceptable extra burden. First, you’d probably want them to receive common stock, not preferred stock (which is the likely next round).

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

Startup Company Lawyer

JANUARY 9, 2011

A logical alternative to convertible debt is a priced Series A preferred stock financing. Mark Suster does a good job analyzing whether convertible debt is preferable to equity , and concludes that convertible debt is better. This leads me to believe that there is a mini-bubble in the early stage financing universe.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

Up and Running

DECEMBER 1, 2015

Typically, employers that offer employees equity compensation will do so in the form of common stock, preferred stock, or stock options. Here are a few rules for hiring good employees: Look for people that take initiative, who are self-starters, and who want to work for a company like yours. Hire slowly, fire fast.

Equity 60

Equity Employee Stock Options Vesting 60

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)?&#. So why do people do convertible debt with a cap? 20-25% dilution).

Equity 319

Equity Early Stage Angel Investor Valuation 319

Gust

AUGUST 6, 2014

two angel groups investing money in Series Seed Preferred stock purchase. a single venture capital fund putting in the full amount as Series A Convertible Preferred investment. Should there already be people interested in investing first before starting a round? A term sheet.

Term Sheet 170

Term Sheet Lead Investor Preferred Stock Common Stock 170

Ben's Blog

JULY 16, 2013

They might have said something ridiculous like: “Based on the current price of the preferred stock, your offer is already worth $5M.” As if the common stock were actually the same as preferred stock. As if the price could never go down. Silly them.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

Gust

JULY 18, 2012

As new people join the team, either as employees or as outside contractors, advisers or consultants, it’s common to grant them options, requiring Board approval. It’s common to include these two subjects in some of the earliest Board and shareholder consents of a new startup. (In

Stock Options 188

Stock Options SEC Stock Government 188

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? Too much other garbage in that doc and don't want to confuse people. 281 people are following this question. Yes, I had seen that.

Term Sheet 41

Term Sheet Startup Angel Investor Wiki 41

Business Plan Blog

NOVEMBER 13, 2013

Since investment in a startup is risky and most people are reluctant to contribute funds, startup entrepreneurs can use different ways to make funding from FFF look less risky. 3) Giving non-voting stock. Convertible Debt Financing. 2) Giving equity in the company. About The Author.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

Up and Running

MAY 23, 2016

Identify that glitch that you can personally relate to, and solve a problem, and get more people around as customers as you are solving the problem for them.” – Krish Subramanian, co-founder and CEO of Chargebee. Gene Caballero, co-founder of GreenPal, validated his idea by getting out and speaking with random people. “We

Software Review 74

Software Review Software Delaware Forecast 74

Austin Startup

OCTOBER 27, 2017

Out of State VCs When you’re not CEO Material Preferred Stock v. Common Stock Ask the Users Because we’re known as Startup/VC lawyers who don’t represent VCs (just companies), I often get asked about my thoughts on “founder friendliness.” Good entrepreneurs and advisors know that. Background reading: Local v.

Founder 48

Founder Cap Table Preferred Stock Common Stock 48

Agile VC

FEBRUARY 28, 2013

increasing dividends or issuing preferred stock). Some people think Apple should buy Netflix. I had read somewhere that Apple’s cash pile was equivalent to Hungary’s GDP so I tweeted out the suggestion that perhaps an activist shareholder should push an acquisition of Hungary rather than thinking small (e.g.

Hungary 168

Hungary Dividend Vertical Preferred Stock 168