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). Consequently, he passed.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Startup Professionals Musings

SEPTEMBER 14, 2010

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Define equity type. Marty Zwilling.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

Startup Professionals Musings

JANUARY 27, 2012

Entrepreneurs sometimes assume an initial agreement with an Angel is a commitment, so they start spending before any money is received. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Define equity type.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Both Sides of the Table

SEPTEMBER 8, 2012

If you do a capped note it’s bad for the entrepreneur. Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. This is occasionally how convertible notes are structured at the time of conversion anyways. I recently wrote about my views that startups rounds should be priced.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Agile VC

DECEMBER 4, 2014

But delaying or avoiding the conversation often results in it being more awkward than it needs to be. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. Once you have the framework, it’s simply a matter of having the conversation and reaching an agreement.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

www.inc.com

SEPTEMBER 24, 2011

Entrepreneur news from reporter Eric Markowitz. In the 1990s, Graham was one of those entrepreneurs giving away equity in exchange for crucial services. 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. Newsletters.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Tim Keane

JANUARY 12, 2010

Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. Term-sheets and Valuations: Thinking about Negotiations.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Austin Startup

JULY 6, 2018

More traditional and comprehensive programs often require 5–8% of common stock, but often provide between $20K and $100K up-front as well. Entrepreneurs often celebrate faking it until you make it. Some entrepreneurs find it invaluable. Anti-Dilution. See: Startup Accelerator Anti-Dilution Provisions; The Fine Print.

Dilution 48

Dilution Startup Technical Review Equity 48

Both Sides of the Table

MARCH 21, 2010

As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. If the goals are achievable but the partner isn’t performing you have a “carrot&# to use in difficult conversations.

Warrant 298

Warrant Dilution Startup Stock Options 298

Gust

OCTOBER 17, 2011

Entrepreneurs sometimes assume an initial agreement with an angel is a commitment, so they start spending before any money is received. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists. Define equity type.

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Angel Investor 158

Gust

DECEMBER 18, 2013

That said, the primary entrepreneur-friendly reason for doing a Convertible Note (and the reason that no serious investor under regular circumstances will therefore do an uncapped note) is: The valuation negotiation is put off until the next round. Invested Interests convertible note entrepreneur investors series seed'

Founder 150

Founder Valuation Seed Money Common Stock 150

Gust

OCTOBER 12, 2011

In Part II, we looked at the mandatory conversion language that is at the heart of any convertible debt financing. In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. Readers may find it helpful to download the sample term sheet from my firm’s website and follow along with the commentary.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Up and Running

DECEMBER 1, 2015

Typically, employers that offer employees equity compensation will do so in the form of common stock, preferred stock, or stock options. Conversely, very junior employees have relatively little influence over the company, so their equity grants should be correspondingly much smaller, if at all.”.

Equity 60

Equity Employee Stock Options Vesting 60

ReadWriteStart

MAY 8, 2012

So we asked a panel of eight successful young entrepreneurs from the Young Entrepreneur Council (YEC) about their startup funding successes (and failures) and the lessons they learned. Most entrepreneurs approach fundraising as a transaction. The best way to do that is to leverage the hard-won experience of real-world startup.

Cofounder 140

Cofounder Startup San Francisco Silicon Valley 140

Scott Edward Walker

APRIL 9, 2012

Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) ii) what happens if the maturity date is reached prior to the note’s conversion to equity? Why Can’t a Startup Issue Shares of Common Stock to Investors?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Austin Startup

JULY 22, 2021

It’s hard to describe in words the palpable energy when a room is this packed full of incredible female entrepreneurs at the Women in Tech Summit at Capital Factory. On October 4th, five technology startup finalists will pitch to a panel of advisors and judges made up of successful investors, entrepreneurs, and industry leaders.

San Antonio 107

San Antonio Dallas Houston Founder 107

Tim Keane

APRIL 12, 2006

Ten questions the entrepreneur should ask the (prospective) investor. If they’re making it as part of a group that the entrepreneur likes, fine. If they are “solo,” though, the entrepreneur will want to know a lot about their attitudes and expectations, especially when things go wrong. » April 12, 2006.

Entrepreneur 60

Entrepreneur Sweat Equity Valuation Common Stock 60

Gust

OCTOBER 21, 2011

This week we move on to something near and dear to the hearts of entrepreneurs and investors alike: The exit, more formally known as a “ liquidity event.” In Parts II and III, we looked at commonly used mandatory and voluntary conversion language in convertible notes.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Business Plan Blog

NOVEMBER 13, 2013

Since investment in a startup is risky and most people are reluctant to contribute funds, startup entrepreneurs can use different ways to make funding from FFF look less risky. Among the most common methods of funding used by startups when raising seed capital is “Convertible Debt Financing.” 3) Giving non-voting stock.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

YoungUpstarts

JUNE 23, 2015

Pick up the phone and have a conversation. Do you have common stock (or membership units)? If preferred, what are the differences between common and preferred? He also serves as counselor and personal advisor to executives and entrepreneurs. Talk to other investors. Can you tell me about the business? Preferred?

Private Equity 100

Private Equity Common Stock Equity Reputation 100

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. A rather common but small dividend rate of six percent becomes a massive amount after seven years, almost half again the value of the original investment.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

The Next Web

JUNE 17, 2015

And, on a similar note, I would limit equity conversations to service providers that are going to be long-term in nature, helping you build your business over time. Now that we understand which service providers we are willing to have equity conversations with, next we have to understand how to structure these deals.

Equity 60

Equity Valuation Preferred Stock Common Stock 60

Scott Edward Walker

JUNE 9, 2019

This is a huge red flag and founders should push back very hard. ” Mark also points out that there will be a significant negative signal to outside investors if the super pro rata rights are not exercised by the inside investor.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Austin Startup

OCTOBER 27, 2017

Good entrepreneurs and advisors know that. Out of State VCs When you’re not CEO Material Preferred Stock v. Common Stock Ask the Users Because we’re known as Startup/VC lawyers who don’t represent VCs (just companies), I often get asked about my thoughts on “founder friendliness.” Background reading: Local v.

Founder 48

Founder Cap Table Preferred Stock Common Stock 48

Austin Startup

OCTOBER 18, 2017

A lot of it is very good, but a lot is also totally inappropriate for a founder in, say, Austin, Boulder, or Atlanta (or markets like them); where the dynamics between entrepreneurs and investors are fundamentally different. Extensions are very common. Context matters. Know thyself, and thy leverage. See “ Angel Investors v.

Silicon Valley 48

Silicon Valley Los Angeles Angel Investor Common Stock 48

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. A rather common but small dividend rate of six percent becomes a massive amount after seven years, almost half again the value of the original investment.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

venturehacks.com

OCTOBER 21, 2010

This reverse dilution benefits all classes of stock proportionally even though the common stock holders paid for all of the initial dilution in the first place! Most VCs can appreciate an entrepreneur who is focused on building his business and doesn’t want to raise money full-time.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Agile VC

APRIL 17, 2011

At the end of the day Kayak’s playing a key role in the online travel process, but it appears more of the revenue comes from filling top of the conversion funnel rather than the middle or bottom of it. Interesting to note that Hafner and English own common stock but also made meaningful investments in the Series A & B rounds.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

APRIL 14, 2010

It’s meant to be a bit provocative but the reality is that I give this advice to entrepreneurs all the the time and I usually leave the “e&# off of the end. I normally offer this advice in the capacity of really wanting to help entrepreneurs so please bear with me. management, founders, angel investors) get any money.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

venturehacks.com

MARCH 21, 2008

If an advisor can uncork a million dollars of your company’s latent value with 15 minutes of conversation or a single introduction, you should pay him appropriately. 0.25% of a company’s post-Series A stock. Advisory shares are normal common stock. Normal advisors The normal advisor gets 0.1%-0.25%

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. It’s like we need a finance 101 course for entrepreneurs.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Austin Startup

AUGUST 1, 2017

TL;DR: In a market that has historically idolized huge, splashy financings and exits, an increasing number of entrepreneurs are realizing that everyone else’s definition of success — particularly among certain large VCs — isn’t necessarily aligned with their own. Most individual VCs can only support about 7–10 companies at a time.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48

thestartuplawyer.com

FEBRUARY 24, 2010

Entrepreneurs often believe their startup company faces legal threats from only external sources. do not think being friends or relatives reduces the need for these difficult and/or awkward conversations. We entrepreneurs constantly try to refine our product or model, so it is only natural to think that we should refine ourselves.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40