Dual Class Common Stock Structure for Founders

The Startup Lawyer

A startup founder’s desire to hold equity better than plain-vanilla common stock isn’t new. Several years ago, Series FF stock for founders was all the rage when it came to founder liquidity at subsequent financing rounds. We implemented Series FF for a handful of clients back then but we haven’t done so recently. In the past couple years, we’ve … Continue reading → Incorporation

Creative Common Stock

ithacaVC

A cap table is a written record (in Excel, for example) of who owns stock in your company. It lists every owner out by amount owned, type of stock (common or preferred), and date purchased. One rule of simple cap tables is to issue “normal” stock to founders (common stock only) and investors (typically preferred stock, but sometimes common stock to early friends and family). I am a huge fan of simple cap tables.

8 Ways To Maximize The Value Of Your Startup Stock

Startup Professionals Musings

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. Make sure the government waits for a stock sale to collect taxes.

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What is Class F common stock?

Startup Company Lawyer

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. Companies such as Google , Martha Stewart Living Omnimedia , Broadcom and others have super-voting common stock.

Common Stock vs. Preferred Stock in Venture Funding Transactions

Growthink Blog

The question is whether they need to issue common or preferred stock. The answer depends on how and what rights are defined in the preferred stock. I get the same question a lot from entrepreneurs raising equity capital (venture capital or angel funding).

Founder Liquidity

K9 Ventures

If there is one piece of advice I would give to the founders of BST, it is to consider selling a part of their personal stock in the company at that stage. If things go well, and your company succeeds beyond your wildest dreams, it will end up being the most expensive house ever (because you could have held your stock and made a lot more on it). 3) Setting a precedent for the price of the Common Stock : This is the biggest issue with founder liquidity.

Founder Liquidity

K9 Ventures

If there is one piece of advice I would give to the founders of BST, it is to consider selling a part of their personal stock in the company at that stage. If things go well, and your company succeeds beyond your wildest dreams, it will end up being the most expensive house ever (because you could have held your stock and made a lot more on it). 3) Setting a precedent for the price of the Common Stock : This is the biggest issue with founder liquidity.

To Maintain Control of Your Company After Its IPO, Follow Mark Zuckerberg's Lead

Inc Startups

Facebook shareholders quickly voted down a proposal to give its common stock shareholders more say in the company's decisions

How Many Shares Should be Issued to Founders at Incorporation?

The Startup Lawyer

I typically advise issuing 50% to 80% of the authorized shares of Common Stock to the initial founders upon incorporation. Thus, if the certificate of incorporation authorizes 10,000,000 shares of Common Stock, an aggregate of 5,000,000 to 8,000,000 share should be issued at incorporation. If the startup plans to bring on additional founders in the […]. Incorporation

Rackspace Officially Goes Private in $4.3 Billion Deal

SiliconHills

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

Expedia to Buy HomeAway for $3.9 Billion

SiliconHills

Under the terms of the deal, Expedia will offer to acquire each outstanding share of HomeAway’s common stock […] The post Expedia to Buy HomeAway for $3.9 Expedia, based in Bellevue, Washington, announced Wednesday plans to buy Austin-based HomeAway in a deal worth about $3.9 billion. That represents a per share price for HomeAway of $38.31, based on Expedia’s closing price on Nov.

How to Divide Founder Equity: 4 Criteria to Discuss

View from Seed

Additionally, you should put whatever agreement you reach to paper , even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

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What happens when a company is acquired for less money than it raised in funding?

Gust

5) Senior Preferred Stock and warrants. 7) Junior Preferred Stock and warrants. 9) Common Stock (including any Preferred that converted to Common, any exercised options, and all Founders stock) and Common stock warrants.

Legal Basics: Fully-Diluted Capital

VC Ready Blog

Fully-diluted capital expresses the entire capitalization of a company in terms of shares of the company’s common stock by taking the shares of common stock already issued and outstanding and adding shares of common stock that may be issued upon (a) conversion of any convertible securities (such as convertible preferred stock) or (b) exercise of any rights to acquire common stock underlying options, warrants or other derivative securities.

Payment Data Systems to Begin Trading on the NASDAQ Stock Market

SiliconHills

San Antonio-based Payment Data Systems, which processes online payments for other companies, announced Tuesday that it has received confirmation that its common stock will begin trading on the NASDAQ Capital Market starting Aug. In addition, Michael Long, chairman and CEO of Payment Data Systems and Louis Hoch, the company’s president, will ring the opening […] The post Payment Data Systems to Begin Trading on the NASDAQ Stock Market appeared first on SiliconHills.

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

Additionally, you should put whatever agreement you reach to paper, even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

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Startup Financing: Overview of Preferred Stock

Early Growth Financial Services

From time to time on Founders Workbench we give a brief primer on common terms and issues in venture financings. Today, we’re tackling participating versus non-participating preferred stock, a fundamental economic term in VC deals that goes to the heart of the business agreement between investors and management in connection with a sale of the company. This post by Ian Engstrand first appeared on Founders Workbench.

Payment Data Systems Buys Akimbo of San Antonio for $3 million

SiliconHills

Payment Data Systems is buying the company with common stock in two tranches with up to $300,000 in cash if any liabilities are assumed. Payment Data Systems, an online payments company, announced Tuesday it has acquired Akimbo Financial for $3 million. Akimbo, founded in 2010, has raised $850,000 in investment. The company, based at Geekdom, […] The post Payment Data Systems Buys Akimbo of San Antonio for $3 million appeared first on SiliconHills.

Elon Musk Is Betting $100 Million on Tesla

Inc Startups

Taking advantage of its soaring stock price, the CEO puts his money where his mouth is. The company is taking advantage of its soaring stock price, offering new and convertible shares, and raising more money. The message: The stock will go higher, says Forbes.

TSYS Acquires NetSpend of Austin for $1.4 billion

SiliconHills

The deal calls for TSYS, based in Columbus, Georgia, to pay $16 in cash for each share of NetSpend common stock. TSYS announced plans to acquire Austin-based NetSpend for $1.4 billion. Netspend, founded in 1999, sells prepaid debit cards and other financial services to customers without bank accountants in the United States. NetSpend, which sells [.] The post TSYS Acquires NetSpend of Austin for $1.4 billion appeared first on SiliconHills. Austin Technology

How to Raise Investor Funding for Your Startup

Early Growth Financial Services

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.

SolarWinds Announces $50 Million Stock Buyback

SiliconHills

Austin-based SolarWinds announced Monday that the software company plans to repurchase up to $50 million worth of its common stock. The post SolarWinds Announces $50 Million Stock Buyback appeared first on SiliconHills. “This share repurchase reflects the confidence of our management team and board of directors in the long term growth strategy that we have laid out and are executing on for SolarWinds,” Kevin Thompson, the company’s [.]

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How do venture capitalists feel about following a crowdfunding capital raise?

Gust

The answer to that question at the pre-conference speaker’s dinner implied unanimous agreement (from a group consisting of many of the top angels, VCs, lawyers, and pundits in the industry), that “direct, equity-based, common stock crowd funding as envisioned by the JOBS Act” would absolutely, positively preclude future investment by any serious professional investor, either angel or VC.

How do startups decide who sits on the board?

Gust

In a larger startup post Series A or B, the board might be expanded to five people, with two directors chosen by the Common stock holders (the founders), two by the investors (often one by each of two VC funds), and one independent director agreed to by everyone. A company’s board of directors is technically elected by the company’s shareholders.

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

Additionally, you should put whatever agreement you reach to paper, even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

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Global Cash Access Acquires Austin-based Multimedia Games for $1.2 Billion

SiliconHills

Global Cash has agreed to acquire all outstanding common stock of Multimedia Games for $36.50 per share, 31 premium from the stock’s close on Sept. The news sent Multimedia Games’ stock which […] The post Global Cash Access Acquires Austin-based Multimedia Games for $1.2 Global Cash Access Holdings of Las Vegas announced Monday plans to buy Austin-based Multimedia Games Holding Co. for $1.2 billion in cash.

Second-Class Investor Citizens: Facebook’s IPO and Dual-Class Equity Structures

Gust

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.

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Founder’s Stock Is Gold, If You Know The Rules

Gust

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Stock dilution control.

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Private Company Valuations: FourSquare Labs, Inc.

Recent Buzzes - VC Experts, Inc.

We also located another filing from January 2010 for the security issued pursuant to a "Flexible" Stock Purchase/Option Plan or Agreement: "Common Stock and options to purchase shares of Common Stock under the 2009 Stock Plan" to the tune of "762,000 shares of Common Stock or options to purchase 2,516,790 shares of Common Stock" at a price per share of $

Convertible Debt – Warrants

Ask The VC

There are numerous different ways to calculate this, such as: $20,000 worth of common stock at the last value ascribed to either the common or preferred stock; $20,000 worth of the last round of preferred stock at that’s rounds price of the stock; or. 20,000 worth of the next round of preferred stock at whatever price that happens to be.

allensblog: "Fully-Diluted"

Allen's Blog

This, plus the informal way the term is used in venture financings, puts a premium on the parties explicitly agreeing to a commonly-understood definition. In general, the term "fully-diluted" attempts to capture the notion of how many shares of Common Stock would be outstanding if all securities of the company that either (1) are outstanding or (2) are available for the board to grant or issue actually become Common Stock in accordance to their terms.

Why Uber is The Revenge of the Founders

Steve Blank

To turn your company’s stock into cash, you engaged a top-notch investment bank (Morgan Stanley, Goldman Sachs) and/or their Silicon Valley compatriots (Hambrecht & Quist, Montgomery Securities, Robertson Stephens). None of this was law, and nothing in writing required this; this was just how these firms did business to protect their large institutional customers who would buy the stock. Founders can now outvote the preferred stock holders (the investors).

Founder’s Stock Is Gold, If You Know The Rules

Startup Professionals Musings

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Stock dilution control.

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Venture Capital Term Sheets: Conversion Rights

Scott Edward Walker

Here are the issues I have addressed to date: common mistakes dealing with VC’s valuation liquidation preferences stock options exploding term sheets and no-shop provisions anti-dilution provisions dividends Board control protective provisions drag-along provisions pay-to-play and pull-up provisions In today’s post, I examine conversion rights of investors. As many of you know, VC investors are typically issued shares of preferred stock, not common stock.

What’s a Fair 409A Discount?

VC Adventure

As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the company as well). Quick note: I’m not your lawyer.

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Are Standard Venture Capital Financing Rounds Up To Speed With The Latest Trends For Going Public?

Recent Buzzes - VC Experts, Inc.

In contrast, standard venture capital deal terms are geared towards a pre-IPO conversion of all classes into common stock Google recently made headlines with an announcement that it is planning on splitting its shares and creating a new class of shares without voting rights. In addition, fairly recent high-profile IPOs of internet/technology companies like Zynga and Groupon demonstrate a trend of going public with a dual class or multi-class capitalization structure.

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Here's Why You Need A Liquidation Preference

A VC : Venture Capital and Technology

And investing in common stock when the founder controls the company and the exit is not a fair deal. I get a lot of heat every time I mention that I won't invest without a liquidation preference. People say that it means I don't want to take a risk. I am happy to take a risk. We do it every time we make an investment. We lose money on some of them and I can live with losing money. It is the price you have to pay for the opportunity to make money.

Rally Gives $1.3 Million To The Boulder Community

Feld Thoughts

This check is for The Community Foundation and for the Entrepreneurs Foundation of Colorado (EFCO) and results from a gift of 24,793 shares of common stock from Rally at the time of its first financing that represented approximately 1% of the equity of the company.

If I Launched a Startup

The Startup Lawyer

4) Type of Shares: Common Stock. (5) 5) Par Value of Common: $0.0001. (6) Here’s what I’d do in the beginning: Incorporation. (1) 1) Entity Choice: Corporation or Corporation. (2) 2) State of Incorporation: Delaware. (3) 3) Authorized Shares in Charter: 10,000,000 Shares. (4) 6) Initial Founders Issuance: 8,000,000 Shares. (7) 7) Founders Equity Split: Depends on the Team, But Quickly and After the Awkward & Difficult Conversations. (8)

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If I Launched a Startup

The Startup Lawyer

4) Type of Shares: Common Stock. (5) 5) Par Value of Common: $0.0001. (6) Here’s what I’d do in the beginning: Incorporation. (1) 1) Entity Choice: Corporation or Corporation. (2) 2) State of Incorporation: Delaware. (3) 3) Authorized Shares in Charter: 10,000,000 Shares. (4) 6) Initial Founders Issuance: 8,000,000 Shares. (7) 7) Founders Equity Split: Depends on the Team, But Quickly and After the Awkward & Difficult Conversations. (8)

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Investment Tips for Small Business Owners

The Startup Magazine

Penny Stocks. If you aren’t all that savvy when it comes to investments, start with penny stocks. As they aren’t worth much, a common stock sold for under a dollar on the market is a great way for a small business owner to learn the market and develop important skills.

How to Protect Your Startup Founder’s Shares

Startup Professionals Musings

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Stock dilution control.

You Got To Be In It To Win It

A VC : Venture Capital and Technology

They used to be more common twenty five years ago when I entered the venture capital business. This requirement to exercise upon departure is a big reason why the secondary market in employee common stock has taken off. Employees who leave companies need to sell some of their vested stock to come up with the cash to exercise and pay taxes associated with exercise. That's how Skype's option plan is described in this piece by Felix Salmon.