Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). The primary rights in these documents, ranked in order of importance in my opinion are: Non-participating preferred liquidation preference. under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Feld Thoughts

JUNE 2, 2015

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

Tim Keane

JANUARY 12, 2010

.   At the financial level , and assuming a harvest of the investment in the company without the need for further financing, two terms stand out as driving economics: the dividend and the liquidation preference. Second a liquidation preference and a participation.   First , dividends.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

The Startup Lawyer

JUNE 9, 2010

A startup’s Series A financing shouldn’t be a large liquidity event or salary payday for the startup’s founders. While a startup typically receives millions of dollars in a Series A, if too much of that $$$ flows guaranteed to the founders, various incentives get out of whack. Case Study.

Salary 99

Salary Term Sheet Liquidation Preference Liquidity Event 99

ithacaVC

MAY 1, 2013

I read an article this morning in DealBook titled “ In Venture Capital Deals, Not Every Founder Will be a Zuckerberg “ Go ahead and give it a read. The article states “When venture capitalists invest, they typically demand preferred shares that accrue a yearly dividend of about 8 percent. Huge difference!

Dividend 45

Dividend Liquidation Preference Common Stock Venture Capital 45

Scott Edward Walker

JULY 27, 2011

Indeed, whether a minority common stockholder is a founder, an advisor or even a friends/family investor, such stockholder will usually not be contractually granted any of the rights that are typically granted to preferred stockholders. The board can either accept or reject the demand. 2) Right to Bring a Derivative Claim.

Delaware 49

Delaware Liquidation Preference Redemption Los Angeles 49

Spencer Fry

APRIL 17, 2017

What I worry about is the demand on every one of your potential customer’s attention and time. As a bootstrapped startup, the only accountability you have is to yourself and to your co-founder if you have one. Competition is everywhere. Direct competitors are one thing, but I don’t worry about them. Having great accountability.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

abovethecrowd.com

MAY 20, 2013

There are common stock, common options, and as many as three to five different layers of preferred stock, each with a specific liquidation preference. 3) Investor/Founder Mindset Challenges. Most founders and investors typically think about their personal stakes in a private company in terms of “ownership percentage.”

Merger 53

Merger Institutional Investors Liquidation Preference Preferred Stock 53

SoCal CTO

JULY 13, 2010

One of the highlights of my trip was a startup dinner which included Jason Fried and David Heinemeier Hansson, the founders of 37signals. Creating Incremental Strategic Value - Ask the Angels , June 17, 2010 We can easily overlook the level of demand pull when we are assessing strategic value. liquidation preference.

Cofounder 175

Cofounder Technical Cofounder Term Sheet Startup 175

Professor VC

JULY 25, 2013

In investment parlance, it strictly means that new classes of stock have equal rights with prior classes in terms of liquidation preference, voting rights, etc. Their response was that we should be happy they didn''t ask for a participating preference on top of the seniority. Startup outcomes tend to be very binary.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

Both Sides of the Table

FEBRUARY 14, 2016

The Laws of Supply & Demand. The most basic chart of microeconomics is a supply & demand curve. Demand represents a buyer and supply a seller. Some products are “inelastic” meaning when prices go up demand doesn’t fall much (think cigarettes, alcohol or even illicit drugs). goes into a startup.

Valuation 150

Valuation Down Round Startup Later Stage 150

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. We have already seen examples of founders and management obtaining liquidity in front of investors.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

The Equity Kicker

DECEMBER 30, 2013

If after a $5m Series A a founder holds 30% of her company and then goes on to raise a $20m Series B at $60m pre-money her stake will drop to 22.5% but she will most likely now be sitting behind a $25m liquidation preference and have taken on new investors who want to exit the company for at least $240m (to get 3x on their investment).

Finance 129

Finance Liquidation Preference Valuation Harvest 129