Both Sides of the Table

JULY 29, 2010

The downside is that people need to buy their stock. I talked also about 409a valuations and why common stock purchases cost less than preferred stock purchases. We covered the week’s M&A deals : Playdom and Kongregate and why Disney and GameStop made the acquisitions. Do it early. they take time!!

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Startup Professionals Musings

MAY 18, 2015

When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Startup Company Lawyer

APRIL 23, 2009

These provisions include a special class of super-voting common stock, called “Class F&# common stock, which is named for “Founders.&#. The COI includes Class A common stock, which has one vote per share, and Class F common stock, which has 10 votes per share. Protective provisions.

Common Stock 33

Common Stock Stock Dividend Delaware 33

Both Sides of the Table

MAY 13, 2013

But the press (and I suspect many of the senior execs of these companies) don’t really explore the corrosive downside of these acquisition. If I don’t commit to millions of dollars of acquisitions I will … die? So I thought I would. Let’s assume $2 million in seed money.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Startup Professionals Musings

JANUARY 29, 2018

I’ll never forget that great sense of excitement I felt when I incorporated my first business, and realized that I was now the proud owner of 10 million shares of common stock. Of course, initially these founder’s shares were worth essentially nothing, but it doesn’t take much of an imagination to grasp the possibilities.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

SiliconHills

NOVEMBER 3, 2016

billion acquisition by Apollo Global Management, with investment by Searchlight Capital Partners. Its common stock, under the symbol RAX, will no longer be listed for trading on the […] The post Rackspace Officially Goes Private in $4.3 Billion Deal appeared first on SiliconHills.

San Antonio 48

San Antonio Common Stock Acquisition Stock 48

www.inc.com

SEPTEMBER 24, 2011

But with the help of Grahams company, which specializes in creating tech systems for start-ups, Jumpstart grew to more than $50 million in revenue--enough to make it an attractive acquisition for media conglomerate Hachette Filipacchi. Graham was happy for his client. But he wished he had been able to share in some of the upside.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Steve Blank

OCTOBER 24, 2017

While 20th century metrics were revenue and profit, today it’s common for companies to get acquired for their user base. Facebook’s ~$20 billion acquisition of WhatsApp, a 5-year-old startup that had $10 million in revenue, made no sense until you realized that Facebook was paying to acquire 300 million new users.).

Founder 245

Founder Technical Review CTO Hire IPO 245

Up and Running

AUGUST 17, 2015

C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). While there is a wealth of information available online, it’s all a lot more tangible when you have case law and real life anecdotes attached to these considerations.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Berkonomics

APRIL 4, 2019

These include election or re-election of board members if required by the bylaws of the corporation, approval of any increases to stock option plans (which would dilute the worth of shares outstanding,) and approve any additions to the capital stock authorized to be issued. But don’t worry.

Stock Options 48

Stock Options Balance Sheet Stock Common Stock 48

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Early Growth Financial Services

JUNE 26, 2014

Valuation — Know what these terms mean: Fully-diluted — This includes all issued stock and anything that could be converted into common stock (typically after an acquisition or IPO), such as your stock option pool.

Pre-Money Valuation 51

Pre-Money Valuation Option Pool Dilution Common Stock 51

www.mattbartus.com

SEPTEMBER 24, 2011

I have been in post-acquisition disputes where a consultant claimed they were still “consulting” and earning shares even though it seemed clear that the company stopped using the services of the consultant. 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

Berkonomics

DECEMBER 6, 2010

Because the valuation is now a requirement under Rule 409a of the Internal Revenue Code, most companies with stock option plans today have fairly valued common stock with known prices per share. It is the same logic larger corporations use when deciding whether to use cash or stock to make an acquisition.

Stock Options 61

Stock Options Stock Warrant Common Stock 61

Early Growth Financial Services

DECEMBER 17, 2012

Sean’s practice focuses on corporate transactions, mergers and acquisitions, private equity transactions, and general corporate matters for both public and private clients, focusing on middle-market, emerging growth and development stage companies. What is founder restricted stock?

Stock 35

Stock Founder Common Stock Private Equity 35

Gust

OCTOBER 12, 2011

In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. There are as many variations on this scenario as there are startups, but here are some common scenarios upon maturity: The startup negotiates with the bridge lenders to extend the maturity date. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

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. While some companies may use it as a means of paying employees a lower salary upfront, it’s very rarely offered as a complete replacement to receiving a regular compensation package.

Equity 60

Equity Employee Stock Options Vesting 60

Business Plan Blog

NOVEMBER 13, 2013

The return only happens when there is an exit via acquisition or an IPO. 3) Giving non-voting stock. NOTE: Angel investors are typically allocated common stock, the same class of stock as owned by founders, as opposed to preferred stocks, which are offered to VCs. Raising Angel Capital. About The Author.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

www.payne.org

SEPTEMBER 22, 2011

Stock Classes: Common and Preferred. Most venture-funded startups have different classes of stock: common and various flavors of preferred. Your offer will almost surely be for common stock. If the company is acquired or liquidated, the preferred stock holders will get paid first.

Equity 56

Equity Employee Vesting Preferred Stock 56

Berkonomics

APRIL 14, 2012

These include election or re-election of board members if required by the bylaws of the corporation, approval of any increases to stock option plans (which would dilute the worth of shares outstanding), and approve any additions to the capital stock authorized to be issued.

Stock Options 81

Stock Options Balance Sheet Stock Common Stock 81

Scott Edward Walker

MAY 15, 2012

In other words, in the event of the startup’s “acquisition” (which is often broadly defined to include a merger, change of control or sale of substantially all its assets), the maturity date of the note would be accelerated, and the amount of the loan, plus interest, would become due at the closing of the acquisition.

Finance 64

Finance Founder Accredited Investor Preferred Stock 64

keen.io

FEBRUARY 5, 2013

This time, I was looking more closely at Keen’s cap table and various financial events, like raising Series A, becoming profitable, and company acquisition. I asked for equity in the form of restricted stock instead of common stock (In my research, I found there is a significant long-term gains tax advantage.

Salary 50

Salary Equity Startup San Francisco 50

Startup Company Lawyer

FEBRUARY 21, 2010

I was speaking at an event last month to a group of CEOs and was surprised by the number of CEOs that were worried about the value of their common stock in a M&A transaction. Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless.

Retention 31

Retention Liquidation Preference Employee Common Stock 31

Agile VC

FEBRUARY 2, 2012

These companies report gross ad revenue but then subtract out “TAC” (Traffic Acquisition Costs) which is basically accounting-speak for the revenue share they pay to the partner sites where the ads actually appear. This is different from companies like Google and Yahoo! billion in cash profit last year. link] leehower.

IPO 100

IPO South Korea Venezuela Revenue 100

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

Professor VC

FEBRUARY 18, 2011

The LinkedIn acquisition of CardMunch a few weeks ago caught my attention. Techcrunch called it one of the " most like-minded and forward-thinking acquisitions I’ve ever seen " I met with the founders of CardMunch several months ago when they were out raising their Series Seed round. The last blogger in Silicon Valley.

Acquisition 31

Acquisition San Jose Angel Investor IPO 31

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Up and Running

SEPTEMBER 20, 2021

Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors. Total share ownership is the sum of the common stock, stock options, preferred stock, and any other stock category for a single individual.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Professor VC

MARCH 12, 2015

However, when I read the announcement and saw that the acquisition price wasn''t disclosed, alarm bells started going off in my head. The board decided not to use an external valuation of Twilio''s common stock that had been done the month prior to the acquisition, but instead come up with their own valuation methodology.

Syndicate 28

Syndicate Syndication Silicon Valley Common Stock 28

www.paulgraham.com

APRIL 28, 2010

Its thesame with acquisitions. Some VCsnow require that in any sale they get 4x their investment backbefore the common stock holders (that is, you) get anything, butthis is an abuse that should be resisted. Theres only common stock at this stage.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

venturehacks.com

OCTOBER 21, 2010

This reverse dilution benefits all classes of stock proportionally even though the common stock holders paid for all of the initial dilution in the first place! Third, if you sell the company before the Series B, all un-issued and un-vested options will be cancelled.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68