Feld Thoughts

JUNE 11, 2021

We didn’t have any financing except for Brad’s credit card and the $10 with which we had purchased our common stock. We employed half a dozen programmers, most of whom were undergraduates from our fraternity working part-time. Dave walked into Brad’s office after calculating preliminary financial results for January.

Common Stock 211

Common Stock Boston Europe Software Developers 211

Agile VC

APRIL 17, 2011

Interesting to note that Hafner and English own common stock but also made meaningful investments in the Series A & B rounds. Notes: In an IPO preferred share classes are converted into common stock, and liquidation preferences and accumulated but unpaid dividends essentially go away. as of 12/31/09).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Feld Thoughts

DECEMBER 28, 2011

If accepted, each company will receive an equity investment of $20,000 in exchange for six percent of the company in common stock, which will be held by TechStars. Microsoft’s Kinect Accelerator is powered by TechStars and applications for the Kinect Accelerator are now being accepted through January 25, 2012.

Intellectual Property 134

Intellectual Property Common Stock Seattle Cofounder 134

Both Sides of the Table

SEPTEMBER 5, 2012

they now have 4x the stock and thus 4x the liquidation preferences (since each share has liquidation preferences on it). The alternative is to give investors 1,2 & 3 the exact same amount of preferred Series A stock and give investors 1 & 2 more common stock (which doesn't have liquidation preferences) to adjust for the discount.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

The Next Web

JUNE 15, 2012

By linking number of shares to hours worked or other quantifiable measures, you run the risk of establishing the price per share of your common stock or options. But beyond motivation, there are more pragmatic factors at play here too. Don’t jeopardize your S Corporation status.

Equity 116

Equity Stock Options Vesting Stock 116

Both Sides of the Table

FEBRUARY 20, 2019

If angel investors are pressuring you to set up a board and if you don’t have the leverage to push back a little then I might suggest a 3-person board in which all 3 seats are appointed by the common stock and you agree to appoint one of these seats to the angel investor but perhaps make it either time based or event based.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

Scott Edward Walker

SEPTEMBER 28, 2011

Indeed, you must make sure that all of the shares of common stock issued by the corporation to the founders are subject to vesting restrictions – which means that ownership of the shares would vest over time (instead of all of the shares being owned outright on day one). Vesting Restrictions.

Vesting 89

Vesting Software Review IP Intellectual Property 89

View from Seed

DECEMBER 4, 2014

You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Equity 315

Equity Founder Sweat Equity Cofounder 315

YoungUpstarts

AUGUST 25, 2015

Typically, investors will be interested in “preferred” stock, which comes with special (aka “preferred”) rights, such as receiving a certain payout before anyone who holds “common” stock. The ownership structure of an LLC is a blank slate.

LLC 100

LLC Technical Review Software Review Limited Liability Company 100

David Teten

JANUARY 19, 2021

Eligible for favorable treatment under Qualified Small Business Stock exemption, if structured as equity. This applies if the investment converts into common stock; details are beyond this essay’s scope. Typically promissory note or non-voting common stock, with covenants. Founder retains control. Governance.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. Equity investment is the most popular and most talked-about avenue for startup funding. These investments are made instead of shares or equity in your startup. Debt investment would have a repayment timeline and incur interest rates.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Agile VC

DECEMBER 4, 2014

You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

Both Sides of the Table

SEPTEMBER 18, 2014

If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase. ” Simple. And so forth.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. It also gets the new investor concerned that management (common stock holders) will not be incentivized because they realize that the investors will take most of the money unless there is a big upside scenario.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

Startup Company Lawyer

AUGUST 31, 2012

There are some features in the sample documents that I like — such as the conversion discount being paid in common stock — that are in the form of convertible debt documents used by YC.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Up and Running

AUGUST 28, 2019

This article will not delve into the more complex options and requirements for a corporation’s stock. You can read further about the details of preferred stock versus common stock Classes A and B. . Most small businesses will be fine sticking to small numbers of common stock only.

Delaware 83

Delaware Stock Nevada Technical Review 83

Startup Professionals Musings

MARCH 23, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms and considerations for Founder’s stock: Negligible real value.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Startup Professionals Musings

JANUARY 22, 2013

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms and considerations for founder’s stock: Negligible real value.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Startup Company Lawyer

MARCH 14, 2010

If I represent investors in a later Series A financing, I would probably use the existence of the drag-along as an excuse to implement a more aggressive drag-along provision — which does not require the approval of the holders of common stock to trigger. Legal fees. The company is obligated to pay $10K for investors counsel.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Feld Thoughts

JUNE 11, 2021

We didn’t have any financing except for Brad’s credit card and the $10 with which we had purchased our common stock. We employed half a dozen programmers, most of whom were undergraduates from our fraternity working part-time. Dave walked into Brad’s office after calculating preliminary financial results for January.

Common Stock 70

Common Stock Boston Europe Software Developers 70

Startup Lessons Learned

AUGUST 26, 2009

They take common stock, not preferred, a fact that the entrepreneurs mentioned to me many times. Every summer, they bring approximately 10 companies to Boulder for an intense "accelerator" experience (dont call it an incubator, or youll get dirty looks).

San Francisco 113

San Francisco Silicon Valley Startup Lean 113

Growthink Blog

JANUARY 24, 2011

The question is whether they need to issue common or preferred stock. The answer depends on how and what rights are defined in the preferred stock. One very popular "preferred right" or "preference" that adds very significant value to outside investors and is common in venture capital investments is a liquidation preference.

Preferred Stock 93

Preferred Stock Stock Common Stock Liquidation Preference 93

Up and Running

SEPTEMBER 19, 2017

For a business that anticipates needing, for example, $500,000 in startup capital, that means that best-case scenario Klemm can expect to give up half of his business’s common stock (and an even larger percentage of control of the business once the deal’s fine print provisions are considered).

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Startup Professionals Musings

JANUARY 15, 2021

When an entrepreneur first incorporates a business, they may find themselves the proud owner of 10 million shares of common stock, commonly called founder’s shares.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Steve Blank

APRIL 26, 2022

Some even insisted that all prior preferred stock had to be converted to common stock. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose. Other times it was simply a take-it-or-leave-it, here are the new terms.

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

ithacaVC

APRIL 5, 2011

One rule of simple cap tables is to issue “normal” stock to founders (common stock only) and investors (typically preferred stock, but sometimes common stock to early friends and family).

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Startup Professionals Musings

OCTOBER 7, 2010

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms for founder’s stock: Negligible par value.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

VC Adventure

AUGUST 15, 2018

Most boards did some level of work to determine the FMV of a company’s stock but generally options were priced between 10% and 15% of a company’s then preferred price (because common equity sits behind preferred equity there is typically a discount applied to the FMV of common stock to account for this “overhang”).

Valuation 48

Valuation Common Stock Cap Table Software Review 48

Agile VC

DECEMBER 4, 2014

You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Startup Professionals Musings

OCTOBER 29, 2013

The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options. More restrictive terms reduce the credible investment amount.

Valuation 258

Valuation Early Stage Warrant Common Stock 258

Startup Professionals Musings

SEPTEMBER 27, 2023

When an entrepreneur first incorporates a business, they may find themselves the proud owner of 10 million shares of common stock, commonly called founder’s shares.

Stock 240

Stock .Net Vesting Founder Vesting 240

www.inc.com

SEPTEMBER 24, 2011

Graham also pushes for common stock, the right to participate in future funding rounds to preserve the size of the stake, and a guaranteed seat on the board. In most cases, Arizona Bays management team asks for a stake of at least 20 percent.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Startup Professionals Musings

SEPTEMBER 19, 2012

The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options. More restrictive terms reduce the credible investment amount.

Valuation 236

Valuation Early Stage Warrant Common Stock 236

Startup Professionals Musings

JULY 8, 2011

The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options. More restrictive terms reduce the credible investment amount.

Entrepreneur 234

Entrepreneur Valuation Early Stage Warrant 234

Gust

JUNE 7, 2014

5) Senior Preferred Stock and warrants. 7) Junior Preferred Stock and warrants. 9) Common Stock (including any Preferred that converted to Common, any exercised options, and all Founders stock) and Common stock warrants. 2) Secured creditors. 3) Un-secured trade creditors.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Both Sides of the Table

SEPTEMBER 8, 2012

The way it works structurally is that you issue stock (let’s say it’s at $1 / share) and for the first 150,000 shares you also grant a warrant of common stock equal to $1 for every share they buy.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Startup Professionals Musings

JUNE 9, 2010

The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options. More restrictive terms reduce the credible investment amount.

Valuation 227

Valuation Early Stage Warrant Startup 227