www.inc.com

SEPTEMBER 24, 2011

Sales & Marketing | Wednesdays. SALES & MARKETING. 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. The Goods: Your Business Toolbox | Thursdays. Finance | Tuesdays. Innovation | Fridays. Email address: Home.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Both Sides of the Table

SEPTEMBER 8, 2012

” If you remember the three rules of sales : it’s. 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. So you need an anchor. But how to get one?”

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

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

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

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Scott Edward Walker

MAY 15, 2012

What Happens If a Startup is Acquired Prior to the Note’s Conversion to Shares of Preferred Stock? As discussed in part 1 , in the context of a seed financing, a convertible note is a loan that typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing.

Finance 64

Finance Founder Accredited Investor Preferred Stock 64

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. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Both Sides of the Table

MARCH 21, 2010

If you simply to a revenue number (say hitting $1 million in sales) and they hit it in year 1 then you’ve lost your carrot for year 2. While I’m a huge believer that sales bonuses should always be uncapped, I think capping PBW’s is a good idea. million in sales. million in sales (e.g.

Warrant 298

Warrant Dilution Startup Stock Options 298

Scott Edward Walker

JUNE 9, 2019

Such right shall not apply to any public offering and will terminate immediately prior to a Qualified Public Offering.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

ithacaVC

DECEMBER 13, 2013

Let’s assume that Founder X owns 800,000 shares of common stock and Founder Y owns 1,300,000 shares of common stock and that the option pool in total has 356,758 shares allocated (to make the total stated above). This clearly illustrates the power of a conversion discount. I have posted on this previously.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Startup Company Lawyer

JANUARY 9, 2011

Tweaking convertible debt so that common stock (instead of preferred stock) is issued for the conversion discount in order to limit liquidation preference overhang. An example of a term sheet provision to provide for the conversion discount to be paid in common stock and the math involved is below.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

Startup Company Lawyer

JANUARY 31, 2011

Automatic conversion: on a $1M equity financing with no conversion discount and no price cap , provided that the transaction documents provide for a right to purchase a pro rata share of future financings. (I Optional equity conversion: on other equity financings with no conversion discount and no price cap.

Preferred Stock 60

Preferred Stock Liquidation Preference IPO Common Stock 60

Duct Tape Marketing

JUNE 5, 2018

This will help to move them closer to the sale. Do the best you can to avoid common stock photos. To ensure you stay top of mind, put enticing forms and CTAs in place (that link to valuable resources) to get their email address and continue to create valuable content that is relevant to their stage in the customer journey.

Kansas City 77

Kansas City Kansas Audience Differentiation 77

Tim Keane

JANUARY 12, 2010

It also assumes the entire value of the investment is captured for investors at a sale of the company in the time specified in the term-sheet. This results in a range of sale prices; in this example from $118.6MM to $21MM.   In most cases, the preferred dividend is paid before any dividend is paid to the common.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Tim Keane

APRIL 12, 2006

Common stock is a vehicle for sharing risk equally with insiders who have more knowledge and ability to affect business results. Fewer investors will take common stock in early stage transactions. Preferred Stock is the most usual form of investment today. Preferred Stock is the most usual form of investment today.

Entrepreneur 60

Entrepreneur Valuation Sweat Equity Common Stock 60