Startup Professionals Musings
SEPTEMBER 27, 2023
Make sure the government waits for a stock sale to collect taxes. 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.
Startup Professionals Musings
SEPTEMBER 26, 2015
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. Investor liquidation priority.
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Startup Professionals Musings
JANUARY 15, 2021
Make sure the government waits for a stock sale to collect taxes. 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.
Both Sides of the Table
JULY 22, 2010
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.
Startup Company Lawyer
AUGUST 31, 2012
” 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.
ReadWriteStart
JUNE 1, 2020
In very few specific cases, depending on the nature of the business, the business model might demand a considerable gestation period or extensive research and development. The shares given out can either be common stocks or preferred stocks. ? Debt investment. A royalty based investment is an exciting mode of funding.
Feld Thoughts
SEPTEMBER 27, 2011
In this case, the convertible debt document doesn’t allow the debt to convert into anything, but at the same time mandates that upon a sale the debt must be paid off. If it’s not a stock deal, then one normally sees one of the above scenarios. So the lenders don’t see any of the upside on the acquisition. Typical language follows.
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