Both Sides of the Table

SEPTEMBER 18, 2014

Convertible notes were previously used primarily for “inside rounds” in which the existing investors provide you with bridge financing to get to the next round. Startup Lessons' Is there ever a situation where a convertible note is a good idea? Thanks for asking. Why don’t they set a valuation then?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

The Startup Magazine

OCTOBER 27, 2019

If you are worried that your start-up will have to navigate a funding gap in the upcoming year, make sure you understand your options and are prepared to secure the cash you need to keep your company going until your financing package comes through. It could mean the difference between failure and success.

Institutional Investors 61

Institutional Investors Startup Security Finance 61

cdixon.org

AUGUST 3, 2012

Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. Some consequences: - For consumer startups with non-transactional models (ad-based or unknown business models), you need something closer to 10 million users versus 1 million users to get Series A funded. -

Bridge Financing 86

Bridge Financing Early Stage Valuation Later Stage 86

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. Pre-money valuations startups receive from incubators are typically low…really low.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Up and Running

JUNE 25, 2014

Then on the planned side, I know many of you work with Palo Alto and BPlans on new business plans, obviously a startup. Sabrina: Scott, I’ll jump in right here to just mention to you that a few people have asked whether you’ll be, throughout, covering both startup and existing businesses. The third here for startups is the SBA.

Small Business 89

Small Business SBA Finance Bankruptcy 89

K9 Ventures

MARCH 23, 2011

The convertible note was really intended as an instrument for a “bridge financing” – when an equity round was imminent, and likely to occur, but the company needed some money in between. In that case, it made good sense to have a debt instrument, where the note holder then converted into equity when the financing occurred.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

www.copelandfirm.com

OCTOBER 21, 2010

Home About Fee Arrangements Location Referrals Testimonials Business Law HUB Certification Mergers & Acquisitions Startup Advice Intellectual Property Copyrights Trademarks Securities Law Debt and Bridge Financing Series A Startup Law Entity Formation Corporation LLC Series LLC RSS Founders Shares: How do you split them up?

Intellectual Property 40

Intellectual Property Founder Vesting Bridge Financing 40

ithacaVC

FEBRUARY 20, 2011

It may explain why Fund Y tries to protect itself, via deal terms, from pay to play provisions that would kick in with respect to future financings.

Bridge Financing 40

Bridge Financing IPO Pay to Play Finance 40

Startup Company Lawyer

JANUARY 11, 2010

Due to the economic results described above, many sophisticated angel investors refuse to do convertible note bridge financings unless the conversion price on the debt is capped. Observation 2 – Angel investors realize convertible debt is a bad deal so they demand price protection provisions (i.e. a price cap).

Angel Investor 39

Angel Investor Valuation Bridge Financing Preferred Stock 39

venturehacks.com

OCTOBER 21, 2010

Venture Hacks Good advice for startups. Given that many companies are doing convertible note bridge financings as their seed round, this seems to come up relatively often. Use a hiring plan to justify a small option pool, increase your share price, and increase your effective valuation.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68