Startup Company Lawyer

AUGUST 31, 2012

Quick answer: convertible equity (or a convertible security) is convertible debt without the repayment feature at maturity or interest. ” In response, Seth Levine wrote a very thoughtful post on convertible debt versus equity. Fred Wilson has been openly critical of convertible debt , and prefers priced equity rounds.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

K9 Ventures

MARCH 23, 2011

I may be well be in the minority in the Valley to think this way — especially so as a seed stage investor — but I have a strong preference for doing priced equity rounds for funding companies at any stage. The typical fix for this problem is to put in a cap in the note for the pre-money price for conversion.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Startup Company Lawyer

JANUARY 31, 2011

Automatic conversion: on a $1M equity financing with no conversion discount and no price cap , provided that the transaction documents provide for a right to purchase a pro rata share of future financings. (I Optional equity conversion: on other equity financings with no conversion discount and no price cap.

Preferred Stock 60

Preferred Stock Liquidation Preference IPO Common Stock 60

Both Sides of the Table

OCTOBER 14, 2009

It’s just that many companies waste equity on advisory boards, pick the wrong advisers or set up advisory boards with the wrong expectations. Since I already attacked one sacred cow, let me come right back with my second: Board Observers. That saves you from the awkward conversation down the line when you want a smaller board.

Advisory Board 215

Advisory Board Strategic Investors Venture Capital Later Stage 215

Hunter Walker

JANUARY 20, 2015

If you just need the money, stick unknown angels in an AngelList Syndicate so they have more limited information rights. And relationships are long term equities. You can reference check angels just like you would VCs or employees. What are some differences btw 10x Angels and 0x Angels? That’s a good thing.).

Cap Table 48

Cap Table Warrant Syndicate Syndication 48

Austin Startup

MAY 17, 2017

Instead, the company just has a loose set of individual advisors they work with on strategic matters, often in exchange for equity with a vesting schedule. Know the difference between a Board Observer, Information Rights, and being a member of the Board of Directors. A step up from ‘information rights’ is a Board observer right.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48