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

Startup Company Lawyer

APRIL 23, 2009

Startup companies consume resources intelligently, put people to work in efficient ways, and produce market driven products at lower costs. These provisions include a special class of super-voting common stock, called “Class F&# common stock, which is named for “Founders.&#. Protective provisions.

Common Stock 33

Common Stock Stock Dividend Delaware 33

Startup Professionals Musings

MAY 18, 2015

When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. Make sure the government waits for a stock sale to collect taxes. Retain the right to reclaim stock from anyone leaving the startup.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Austin Startup

JULY 22, 2021

million in funding Houston’s GroupRaise is a marketplace that helps groups of 20–200 people make reservations at restaurants willing to donate a percentage of the sales back to a charitable cause. Dallas’ ShearShare has a marketplace connecting stylists with available seats at salons and $2.3 million in funding.

San Antonio 107

San Antonio Dallas Houston Founder 107

www.inc.com

SEPTEMBER 24, 2011

Sales & Marketing | Wednesdays. SALES & MARKETING. Theres a huge opportunity cost in not taking equity," he says. He prefers to work with companies that are building Web-based applications and have relatively low start-up costs. The Goods: Your Business Toolbox | Thursdays. Finance | Tuesdays. Innovation | Fridays.

Arizona 40

Arizona Equity Iowa Venture Capital 40

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. I don’t necessarily agree with all of them, but I think the primary argument is simplicity of documents and legal cost.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Up and Running

AUGUST 17, 2015

C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). By the time of their restaurant’s grand opening, they were able to build a brand around their restaurant, perfect their menu, and develop a clear understanding of their operating costs. It helps mitigate startup risk.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

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. Co-sale rights. Legal fees. Comprehensive protective provisions.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

The Startup Magazine

JUNE 7, 2018

and Jacksonville, Florida, which also happens to boast a comparatively low cost of living, ranked relatively high among the best places to start a business. You may also be able to save big by purchasing one of the Jacksonville homes for sale and increase your odds of developing a successful business at the same time. Penny Stocks.

Small Business 77

Small Business Jacksonville Stock Florida 77

Berkonomics

APRIL 4, 2019

Others worry that we will latch onto individual line items within financial data and engage in inquisitions regarding telephone bills, marketing costs and other tactical line items in detailed financial statements. That is one of the many costs of becoming a public entity as many CEO’s have found and dealt with over the years.

Stock Options 48

Stock Options Balance Sheet Stock Common Stock 48

Gust

JULY 23, 2012

Donations of private company stock may be an effective and tax-efficient method of giving with significant benefits to the donor. These assets often have a relatively low cost basis (e.g. At a simple level, you can deduct up to 30% of your annual adjusted gross income for the value of a stock donation. The Tax Benefit.

Stock 114

Stock Capital Gains Warrant Stock Options 114

Scott Edward Walker

APRIL 9, 2012

Why Can’t a Startup Issue Shares of Common Stock to Investors? In fact, many incubators like Y Combinator and TechStars are issued shares of common stock for their initial investment (usually about $20,000). Friends and family are also often issued shares of common stock. Speed, simplicity and cost.

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. Don’t save starting costs by giving the business away.”. I’ll go into the difference between these in just a moment. Types of equity compensation. Pay the fees [for your vendors].

Equity 60

Equity Employee Stock Options Vesting 60

Startup Company Lawyer

MAY 4, 2009

Startup companies consume resources intelligently, put people to work in efficient ways, and produce market driven products at lower costs. The application fee is $50, which only partially offsets costs associated with processing applications. How to scale from the first sale to the millionth. Description: How to get it.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Berkonomics

APRIL 14, 2012

Others worry that investors will latch onto individual line items within financial data and engage in inquisitions regarding telephone bills, marketing costs and other tactical line items in detailed financial statements. That is one of the many costs of becoming a public entity as many CEO’s have found and dealt with over the years.

Stock Options 81

Stock Options Balance Sheet Stock Common Stock 81

Eric Friedman

JUNE 27, 2016

I have seen what I call “predatory advisors” come in and really mess up a cap table by promising big intros and sales contracts only to disappear after the first 6-12 months. If a relationship isn’t working out, you can terminate it or renegotiate to mitigate costs. Tread cautiously here. So why would you do this?

Equity 98

Equity Vesting Cap Table Common Stock 98

Lightspeed Venture Partners

OCTOBER 1, 2012

The company did $1M in sales last year, 90% from wholesale, and had a 10% profit margin. They wanted to get to $10M in sales and then get bought by a big food company. The sales history is anemic, but perhaps the biggest asset that the company has is a trademark for Rockbands in the apparel field. pre money valuation).

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Gust

DECEMBER 8, 2011

Enter into agreements between Newco and founders, early contributors, outside advisors or service providers under which they contribute or assign all intellectual property related to the company’s business to Newco in exchange for the issuance of founders’ stock (Common Stock). Make escrow arrangements for restricted stock (i.e.,

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

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

www.payne.org

SEPTEMBER 22, 2011

Stock Classes: Common and Preferred. Most venture-funded startups have different classes of stock: common and various flavors of preferred. Your offer will almost surely be for common stock. If the company is acquired or liquidated, the preferred stock holders will get paid first. 1% ownership).

Equity 56

Equity Employee Vesting Preferred Stock 56

www.paulgraham.com

APRIL 28, 2010

For example, VCs generally write it into the deal thatin any sale, they get their investment back first. Some VCsnow require that in any sale they get 4x their investment backbefore the common stock holders (that is, you) get anything, butthis is an abuse that should be resisted. Theres only common stock at this stage.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Startup Company Lawyer

JULY 20, 2009

Starting capital gains holding period in the event of a stock sale. If a founder sells stock of a company in a taxable transaction and it is held for greater than one year, then the capital gains tax rate is 15% for founders in the 25% tax bracket and higher.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

Professor VC

FEBRUARY 18, 2011

It was going to be challenging to get scale with a model that charged on a per business card basis, a requirement given the amount of funding and cost for the crowdsourced labor. A stock acquisition is a bet that would provide significant upside (and possible downside) opportunity. Thus, I am raising my questions here.

Acquisition 31

Acquisition San Jose Angel Investor IPO 31