Accepting Outside Investors? Here Are 5 Things to Watch Out for in Your Contract

Up and Running

Covenants. Covenants, a legal term that just means promises, are things you promise to do (known as affirmative covenants ) or promise not to do (known as negative covenants ) as the manager of the business.

Several more real costs of taking outsider investments.

Berkonomics

The combination of restrictive covenants in the investor documents and the new dynamic of board members with an agenda make for a change in the culture of the corporation, certainly one for the CEO. Close. Let’s talk about the reality of taking money from professional investors.

Cost 105

Protect Your Startup From The 5 Most Common Employment Law Risks

Early Growth Financial Services

1) Hiring — There are 3 main areas of risk here: restrictive covenants, compensation arrangements, and confidential information. Restrictive covenants — Employers often use non compete and non solicitation clauses to retain employees. Why worry about employment law risks when you have enough things to focus on: building your team, getting traction, and lining up funding? Well, as the adage goes, “an ounce of prevention is worth a pound of cure.”

Take only “smart money” investments

Berkonomics

We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations. Close. This statement could be considered controversial.

Venture Debt 101

Up and Running

Covenants: borrowers face fewer operational restrictions or covenants with venture debt. Accounts receivable loans will typically include some minimum profitability or cash flow covenants.

Update your banker in good times and bad.

Berkonomics

As loan covenants become closer to being violated or after such an event, bankers have some latitude in deciding how to handle their accounts. You’ve heard the old one – that a banker always seems willing to offer a loan when you don’t need it.

What if you come across juicy competitor information?

Berkonomics

And none of this is especially considered a trade secret, violating the unspoken covenant between competitor CEOs that there is a limit to such exchanges. Close. Many of us belong to industry associations and find ourselves at conferences and trade shows with time to spend with competitors.

Legal Issues Behind Running A Small Business

YoungUpstarts

You would need sound legal advice from an attorney to ensure that you avoid nasty covenants in the lease. by Melissa Page. If you’re running a small business, you need to be on top of legal basics to make your business successful.

Yes, I’d Like $100,000, but What the Heck is a SAFE Note?

Austin Startup

To solve this, VCs and entrepreneurs need a quick and easy way to provide seed funding, without a long, drawn out negotiation, onerous debt covenants, or a crazy valuation that could hurt the investor and/or the entrepreneur.

Back To Biz: The Rulebook For Starting Your Own Business

YoungUpstarts

Restrictive covenants to prevent the seller opening up in immediate competition. At some point in most people’s lives, the temptation to start their own business dangles before them like the proverbial golden apple.

How 20 customer interviews enriched Lexoo’s strategy

The Equity Kicker

Daniel likes to give the following example: SMEs use lawyers a lot to review employment contracts, but the cost of doing so can vary from £300 to £1,400 depending on the complexity of the situation (options, founder status, restrictive covenants etc.). We recently invested in Lexoo , a marketplace connecting SMEs with legal services.

Shark Tank 2012 Holiday Episode Breakdown

Lightspeed Venture Partners

Banks often have operating covenants for their loans that require the company to be hitting plan, or close to it. Although Sharktank has been running reruns on Fridays the last few weeks, the show ran a Sharktank 2012 Holiday special on Tuesday night.

Pros & Cons Of Non-Compete Agreements

YoungUpstarts

Given the challenges and limitations of non-compete agreements, there are other, less severe restrictive covenants and agreements that may be used as alternatives or supplements to non-compete agreements. By Mike Freed , attorney at Gunster.

4 Simple And Savvy Tips For Real Estate SMBs

YoungUpstarts

Housing laws are also covered by different legal covenants, and vary by property type. Image credit: Real estate from Shutterstock.

9 Business Acronyms You Need To Know

YoungUpstarts

EBITDA is often used in loans covenants. Business can be a dirty business. And the language of business can be hard to understand. For beginners in the field (or the more analog of the bunch), business acronyms old and new can confuse and ultimately disappoint if not correctly understood.

NDA 219

10 Things the Bank Will Ask When You Need a Business Loan

Up and Running

Most commercial loan include what we call loan covenants, in which the company agrees to keep some key ratios —quick ratio, current ratio, debt to equity, for example—within certain defined limits. That bank loan you want for your company?

Asset-Based Lending vs. Traditional Bank Lending: Which is Right for You?

Up and Running

Companies seeking financing to maintain and grow their business will often look first to traditional unsecured bank loans, since that is usually the least costly form of borrowing available. However, many small businesses are either: Growing rapidly, Do not have a lengthy track record; or.

Growth requires a different kind of capital.

Berkonomics

Then there is the loan audit fee, often more than $4,000 a year, to pay for the lender’s auditor to make sure the collateral and company are compliant with the covenants of the loan. Growing companies usually require more working capital during their periods of rapid growth.

Launchpad LA – More Details Revealed

Both Sides of the Table

He had a pile of debt and covenants that made him vulnerable if the debt holders wanted to play rough. Today we announced Launchpad LA V2. Full press release with more details is here. We will be selecting 10 startup companies to participate.

The Community Comeback: 14 Ways Local Leaders Are Reshaping America

YoungUpstarts

Pensacola used a Covenant for the Community to guarantee that contractors would use local minorities in the revitalization of downtown.

Funding options for growing businesses

Up and Running

The biggest downside to traditional debt is that it is harder to qualify for, especially in today’s post-financial crisis environment, often requiring at least two years of consistent profitability and going forward the company must maintain and abide by strict financial ratios and covenants.

Master of Customer Acquisition, Matt Coffin, On Startups …

Both Sides of the Table

He tells the story of how he was out of cash, stressed out, nobody in LA or Silicon Valley would give him money, he had finally found an investor in Minneapolis but his venture bank was going to shut him down for breaking a “covenant&# in their agreement by not having enough cash in the bank.

How FX Marketing President Stephanie Gibbons Stuck the American Horror Story Promotional Landing

crowdSPRING Blog

In years prior, each season came with a subtitle that indicated what theme the anthology would follow in the episodes to come, including “Coven,” “Freak Show,” and “Hotel.” You might not be an American Horror Story fan. I wouldn’t blame you. The extravagant horror anthology from Ryan Murphy is at turns decadent, grotesque, and terrifying, and that’s not for everyone.

Outside directors are a price of investment.

Berkonomics

The combination of restrictive covenants in the investor documents and the new dynamic of board members with an agenda make for a change in the culture of the corporation, certainly one for the CEO. However, outside professional investor board members can be a very good asset to the corporation with the skills, experience and broad relationships many bring to the boardroom table.

What is the Right Burn Rate at a Startup Company?

Both Sides of the Table

Many venture debt lines have “covenants” that restrict you from going below a certain amount of cash in the bank (in normal times they are more common – in better times they are less common). I was reading Danielle Morrill’s blog post today on whether one’s “ Startup Burn Rate is Normal. ” I highly recommend reading it.

Money comes smart or dumb. Find smart.

Berkonomics

We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations. This statement could be considered controversial. Now we explore the other side of that coin. Professional investors usually bring “smart money” to the table, defined as money that comes along with good advice and great relationships for corporate growth.

Unintended Consequences: When SAFE and Convertible Notes Go Awry

Pascal's View

The easiest way to do so is via SAFE notes, due to their simplicity, “available online” documentation, no major covenants established to protect the investors, no governance implications at the board level, etc. Andrew Krowne and I recently co-wrote an article in Tech Crunch , Why SAFE Notes Are Not Safe for Entrepreneurs.

Liquidity for Venture Backed Companies Still Comes Largely in One Flavor—Cash Acquisitions

Pascal's View

It is critical to know the state of the art in merger terms leading to an acquisition and in post-merger covenants, particularly with respect to the release of cash consideration held in escrow or as a holdback by the buyer.

Knowledge Is Power: Convertible Note Financing Terms, Part V

Gust

The Notes will be issued pursuant to a definitive Note Purchase Agreement containing customary covenants, representations and warranties of the Company. 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. What seem like boilerplate provisions can be meaningful in some situations.

Associate with competitors. Share carefully.

Berkonomics

And none of this is especially considered a trade secret, violating the unspoken covenant between competitor CEOs that there is a limit to such exchanges. Many of us belong to industry associations and find ourselves at conferences and trade shows with time to spend with competitors.

The need for a board grows with complexity

Berkonomics

Bank loans with restrictive covenants are taken on. Start-ups with one founder rarely have or need a board of directors. In fact, such a board would seem out of place in a one person company. As soon as any outside money is ingested into the corporation, others have a vested and legal interest in the behavior of officers entrusted with the best use of funds.

How FX Marketing President Stephanie Gibbons Stuck the American Horror Story Promotional Landing

crowdSPRING Blog

In years prior, each season came with a subtitle that indicated what theme the anthology would follow in the episodes to come, including “Coven,” “Freak Show,” and “Hotel.” You might not be an American Horror Story fan. I wouldn’t blame you. The extravagant horror anthology from Ryan Murphy is at turns decadent, grotesque, and terrifying, and that’s not for everyone.

How FX Marketing President Stephanie Gibbons Stuck the American Horror Story Promotional Landing

crowdSPRING Blog

In years prior, each season came with a subtitle that indicated what theme the anthology would follow in the episodes to come, including “Coven,” “Freak Show,” and “Hotel.” You might not be an American Horror Story fan. I wouldn’t blame you. The extravagant horror anthology from Ryan Murphy is at turns decadent, grotesque, and terrifying, and that’s not for everyone.

Don't forget to look at venture debt when raising a new round

BeyondVC

In addition, while most associate venture debt with investments in companies with core technology, more and more venture debt firms are back and willing to offer capital to earlier stage web-based companies with no financial covenants and MAC (material adverse change) clauses. We all know the story – it is incredibly cheaper to start a web-based business versus 5 years ago with the rise of open source software and commodity servers.

How to Negotiate a Partner Role at a Venture Capital or Private Equity Firm

David Teten

– Restrictive Covenants (nonsolicitation and noncompete restrictions). It’s hard enough to get a job at a venture capital or private equity firm; it’s even more complex to join as a Partner. I thought it would be helpful to put together some notes on market norms and issues to consider in negotiating a partnership at an institutional investment firm. These are many of the steps I went through when I joined HOF Capital.

How should I finance my new venture? - Startups and angels: Along.

Tim Keane

  Appropriate covenants.   Appropriate covenants. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Leaving a Trail | Main. | How to prepare a sales forecast for a business plan » March 09, 2011. How should I finance my new venture? It’s a deceptively simple question:  what is the optimal way to finance a new startup?

Israeli Red Wines: Some Vintners are Releasing Promising Wines Too Early

Pascal's View

Among other projects, Ari is also working with Napa Valley’s Jeff Morgan of Covenant wines to make Jeff’s first Israeli wine, kosher, of course.

Irene brings rain, flooding and end of news as we know it [#irene]

This is going to be BIG.

Remember the covenant that the music industry used to have with the consumer? On June 17, 1994, the whole country was interrupted by broadcast news—us New Yorkers were watching Patrick Ewing and the Knicks in the NBA Finals. It was the beginning of the biggest media spectacle we had ever seen. All that needs to be mentioned is “White Bronco” and anyone born on the other side of the 1980’s knows what is being referred to.

Libya 120

Why Crunch Modes Doesn't Work: Six Lessons

www.igda.org

From the Work Less Party, Tom Walkers Prosperity Covenant : That output does not rise or fall in direct proportion to the number of hours worked is a lesson that seemingly has to be relearned each generation. Prosperity Covenant , Tom Walker. Skip to Navigation. Why Crunch Modes Doesn't Work: Six Lessons.

One More Time: No NDAs

dashes.com

The same goes for "non-competes" or non- solicitation covenants. Anil Dash. A Blog About Making Culture. About Anil Dash. Best Of. Most Popular. More Info » One More Time: No NDAs. May 7, 2010. By unusual coincidence, this week I had a number of different folks ask me to sign NDA s about the new projects theyre working on.

NDA 48