Keep Term Sheets Simple for Quicker Cash to Spend

Gust

Remember a term sheet agreement is not a deal until the check clears. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists.

Knowledge Is Power: Convertible Note Financing Terms, Part II

Gust

In this installment, I’ll dig into the “how” by dissecting an example term sheet based on a real deal. A term sheet keeps things relatively straightforward by summarizing the most significant deal terms in outline form, whereas the deal documents themselves (often referred to as definitive agreements ) — even for a relatively simple convertible debt financing — inevitably contain some densely written legalese. These deal terms are simple but significant.

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Later-stage rounds and “setting the bar too high”

Chris Dixon

But in reality, assuming the standard preferred structure, the last round investors’ payout is as follows : Scenario 1 : Dropbox exits for greater than $4B ==> investors get a positive return (specifically, exit price divided by $4B).

How to value your company for sale (Part 2)

A Smart Bear: Startups and Marketing for Geeks

Remember how the buyer has his own way of valuing the deal ? You’re skipping a step — trying to decide if the deal is even plausible — but how can you decide that if all you’re doing is thinking about the other side? Do you prefer Deal B?

A Summary of Current Trends in Canadian Mergers and Acquisitions - 2011

Recent Buzzes - VC Experts, Inc.

With keen international interest in Canada's resource sector, the return of financial buyers, strategic investors looking to pursue acquisitions as a means of increasing earnings, and the recent uptick in Canadian "mega-deal" activity, there is no better time to discuss the M&A trends unfolding in 2011. Following a lacklustre 2009 and an uneven 2010, 2011 has signalled further economic recovery and a gradual increase in M&A activity. HOSTILE DEALS.

Piercing the Corporate Veil of Sweat Equity

grasshopperherder.com

by Tristan on January 20, 2011. Three Card Monty Corporate Structures. This is my least favorite thing in the world, being offered sweat equity in a corporate structure that is unnecessarily convoluted. Kevin Carroll says: January 20, 2011 at 9:55 am.

From demo day to dollars!

StartupCFO

If you can agree on a deal with that person you can use that to get people on board. Secure the $, then optimize the deal : While valuation matters, the most important thing is to get the $ you need to get to the next big value-creating milestone.

Dialing for Dollars

Taffy Williams

Having a business advisorand a great corporate counsel is important to the final deals structure. One local VC indicated they review more than 600 deals per year andinvest in around 6. As statedbefore, your startup will have little or no money for the first severalmonths. The most important activitiesyou can do in this time are to create as much value to make the companyfundable. Chicken or Egg” is the bestanalogy one can provide to the situation you will face.

Why Leave A Six Figure Corporate Job For Internet Entrepreneurship?

Entrepreneurs-Journey.com by Yaro Starak

I travelled all over the world wherever business deals were happening, gained tremendous experience and exposure to the Corporate landscape, and learned invaluable life lessons in my career. I worked out a similar deal the next go around, and the snowball started rolling from there. Investment in small businesses require knowledge of transactions and the related aspects such as business valuation, due diligence, deal structuring / financing, contracts, etc.

Startup Blog: 7 Questions You May Get from Potential Investors

Taffy Williams

Wednesday, April 20, 2011 7 Questions You May Get from Potential Investors If you have completed the steps outlined thus far, you have the proper materials to start your search for funding and partners. You never have to take the deal offered and can try to negotiate a better one.

Knowledge Is Power: Convertible Note Financing Terms, Part V

Gust

As we conclude our convertible note financing series, there are assorted terms commonly seen in term sheets and deal documents that are worth touching on briefly. This is the norm for West Coast deals, but it’s often the case in dealing with East Coast investors (more commonly for VC financing rounds rather than angel seed rounds) that the lead investor wants its lawyers to draft the documents.

Knowledge Is Power: Convertible Note Financing Terms, Part IV

Gust

To account for scenarios in which the startup is acquired before it has a chance to complete a priced equity financing round, most term sheets and deal documents contain a “ change in control ” provision. Having covered just about every path a convertible note can take, we’ll finish up the series by looking at a few miscellaneous term sheet items and revisiting the pros and cons of different deal structures.

Book: The Business of Venture Capital

Feld Thoughts

In the fall of 2010 Mahendra Ramsinghani reached out to me by email about a new book he was working on called The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies. I was deep into writing Venture Deals: Be Smarter Than Your Lawyer and VC with one of my other partners – Jason Mendelson – and it was neat to see how Mahendra’s book complimented ours.

Include Deal Terms or Not?

Mark Birch

I had a discussion the other night with an entrepreneur about whether to include specific deal terms in the pitch deck or investor meetings. There are seven main points to consider when talking about the structure of the deal: Raise – The amount of capital you are raising.

Walker Twitter Highlights: August 11th – 21st

Scott Edward Walker

prAYlf Quora-Related Quora: What deal structure should be in place for a friend/family investment of < 20k in your startup? I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship and startups, M&A and legal issues. Below are my five most popular tweets (via bit.ly ) for the past 10 days and a couple of Quora-related tweets.

Knowing When It’s Time To Sell Your Startup

YoungUpstarts

In 2011, Microsoft bought Skype for $8.5 This deal-of-the-day service was founded in November 2008 and quickly became a sensation. The deal closed only four months later in August of 2012. Negotiating a different deal structure could have prevented the price from dropping.

Are Investors Being Unreasonable? - Startups and angels: Along the.

Tim Keane

Ask any of us who've experienced significant down rounds based on some or all of these things, and one begins to understand the cautionary nature of deal structures.    Many I know will actively seek deals to work on that are run by fun, engaging people who are eager to grow the business and know what they're doing.  When there is the prospect of future rounds, sometimes evidenced by misses in the past, deal structures become more caution-driven.

Cracking The Code: The Bessemer 10 laws of SaaS - Fall 2008.

Cracking the Code

A simple example would be if Customer A signs a one-year deal at $10,000 per month, and Customer B signs a three-year deal at $5,000 per month. Consistently delivering a deal per month in this progression gives you a total of 78 months of cumulative recognized revenue.