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8 Keys To Maximizing Your New Venture Stock Net Worth

Startup Professionals Musings

Facilitate an upgrade of founder’s common to founder’s preferred. Investors typically demand preferred stock to give them more control and first payouts, but these advantages can be at least partially offset (up to 20 percent) if you plan ahead.

Stock 240
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7 Investor Term Sheet Demands Startups Need Not Fear

Startup Professionals Musings

For later investments, the price is equity, with a percentage of the owner stock to be assigned to the investor. Type of stock assigned to the investor. Investors typically demand preferred stock, to give themselves certain voting and liquidation privileges over later shareholders.

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These 8 Disciplines Define A Fundable Entrepreneur

Startup Professionals Musings

A C-corporation is more complex and expensive, and is recommended only if you expect to pitch to professional investors who demand preferred stock, or to more than 100 potential shareholders. In the United States, this is a limited liability corporation, or LLC.

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How To Prevent Your Founder’s Shares From Vaporizing

Startup Professionals Musings

Facilitate an upgrade of founder’s common to founder’s preferred. Investors typically demand preferred stock to give them more control and first payouts, but these advantages can be at least partially offset (up to 20 percent) if you plan ahead.

Vesting 298
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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

Things like “ participating preferred stock &# in legalese unsurprisingly never actually call out, “hey, this is the participating preferred language.&# We got a3x participating liquidation preference with interest (not participating with a 3x cap, but 3x participating. 4 * $4 million) and not $4 million.

Valuation 405
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What is convertible equity (or a convertible security)?

Startup Company Lawyer

” As a result, Ted introduced the Series Seed preferred stock documents as an alternative to convertible debt for early stage investments. At the maturity date, there is a risk that investors may demand repayment. The problem. Why convertible equity is better than convertible debt. Convertible debt may need to be repaid.

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Venture Capital Q&A Session

Both Sides of the Table

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. But if you do this early (pre VC) then the price points are pretty low. Do it early. Bad behavior but prevalent. Minutes 11-16 in the video. <<