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. Make sure the government waits for a stock sale to collect taxes. This is where things get technical, but the principles are really quite simple.

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Vesting Dilution Stock Founder Vesting 298

Startup Company Lawyer

MARCH 14, 2010

My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A Co-sale rights. These rights are missing, which is probably okay since I have never heard of a co-sale right being used before. Series Seed Financing Documents (by Fenwick & West).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Company Lawyer

AUGUST 31, 2012

Ted Wang believes that the “reason that capped convertible debt is the current market leader is that entrepreneurs have been conditioned over time to believe that convertible debt is (a) faster (b) cheaper and (c) better for them than equity investment.”

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Convertible Security Equity Security Preferred Stock 73

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

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. Make sure the government waits for a stock sale to collect taxes. This is where things get technical, but the principles are really quite simple.

Stock 240

Stock .Net Vesting Founder Vesting 240

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. While I’m a huge believer that sales bonuses should always be uncapped, I think capping PBW’s is a good idea.

Warrant 298

Warrant Dilution Startup Stock Options 298

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.

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Vesting Common Stock Stock Founder Vesting 245

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. Marty Zwilling.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

www.inc.com

SEPTEMBER 24, 2011

Entrepreneur news from reporter Eric Markowitz. Sales & Marketing | Wednesdays. SALES & MARKETING. In the 1990s, Graham was one of those entrepreneurs giving away equity in exchange for crucial services. The Goods: Your Business Toolbox | Thursdays. Finance | Tuesdays. Innovation | Fridays. Email address: Home.

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Arizona Equity Iowa Venture Capital 40

Both Sides of the Table

SEPTEMBER 8, 2012

If you do a capped note it’s bad for the entrepreneur. Fred, who also wrote his views about convertible debt (significantly more succinctly than I) believes that the price of a single round should be the same for everybody. ” If you remember the three rules of sales : it’s. ” I wrote about it here. why buy me?

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Pre-Money Valuation Finance Liquidation Preference Warrant 294

Growthink Blog

JANUARY 24, 2011

I get the same question a lot from entrepreneurs raising equity capital (venture capital or angel funding). 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. read more.

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Preferred Stock Stock Common Stock Liquidation Preference 93

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.

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Term Sheet Valuation Dividend Liquidation Preference 68

Gust

MARCH 16, 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 175

Stock Vesting Common Stock Founder Vesting 175

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. At that time the original split makes all the difference.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

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. Price is always a consideration in investing, but particularly so if the entrepreneurs have shown an interest in an early exit. The entrepreneur took this offer.

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Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Startup Company Lawyer

MAY 4, 2009

Philip Kaplan – Entrepreneur. How to scale from the first sale to the millionth. The Founder Institute has developed Class F common stock , which provides founders with a maximum amount of control over the founder’s company. Jason Calacanis - CEO, Mahalo. Russ Fradin - CEO, Adify. Description: How to get it.

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Founder Warrant San Francisco Intellectual Property 28

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. While some companies may use it as a means of paying employees a lower salary upfront, it’s very rarely offered as a complete replacement to receiving a regular compensation package.

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Equity Employee Stock Options Vesting 60

Gust

DECEMBER 8, 2011

I urge all entrepreneurs to consult and develop a good working relationship with a qualified startup lawyer. Make escrow arrangements for restricted stock (i.e., Consummate the stock issuances, make any necessary securities filings and issue the corresponding stock certificates. Caveat entrepreneur !

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Intellectual Property Non-disclosure Agreement Delaware Stock 139

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.

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San Antonio Dallas Houston Founder 107

The Startup Magazine

JUNE 7, 2018

Just recently, WalletHub aimed to help aspiring entrepreneurs by comparing relative startup opportunities across over 180 cities in the U.S., 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.

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Small Business Jacksonville Stock Florida 102

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.

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Preferred Stock Finance Common Stock Liquidation Preference 87

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.

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Entrepreneur Sweat Equity Valuation Common Stock 60

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. original cost) – and in the cases of entrepreneurs who have founded companies, the cost basis is effectively zero – and a significant current market value that would result in large capital gains taxes if sold.

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Stock Capital Gains Warrant Stock Options 114

Berkonomics

MAY 22, 2014

The sale of equity in private companies is regulated by the Securities Act of 1933, which requires that the company either register with the SEC or meet one of several exemptions (Regulation D). The entrepreneur may have already raised half or more of the cash required in this round and is eager to top off the round.

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Early Stage Accredited Investor SEC Private Placement 79

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.” Entrepreneurs generally don’t ask for this kind of language, but most sophisticated investors will insist on it in one form or another.

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Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Growthink Blog

MAY 10, 2012

If it's not your plan to get venture capital down the road, then you'll probably stop in Stage 2-receiving enough funding to boost your marketing, sales, and infrastructure to grow organically from there to the point where you are satisfied or ready to sell.

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Equity Mezzanine Later Stage Venture Capital 88

Gust

OCTOBER 3, 2011

For a first time entrepreneur trying to figure out the arcane world of startup financing, it can be very confusing to understand the roles that different types of investors play in funding promising companies, as well as the point in a company’s life at which they enter the stage.

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Finance Venture Capital Intellectual Property Early Stage 70

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. 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.

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Dividend IRR Preferred Stock Participating Preferred 62

Startup Company Lawyer

JULY 20, 2009

At some point, however, an entrepreneur will need to formally incorporate a company. In addition, if an entrepreneur needs to engage third party contractors, it generally makes sense to incorporate a company so that the third party enters into an agreement with a company instead of an individual. Issuing stock options.

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IP Stock Options Preferred Stock Capital Gains 67

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

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.

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Preferred Stock Term Sheet Dilution Stock 56

Berkonomics

APRIL 4, 2019

On the other side, entrepreneurs and CEO’s usually have a natural fear of giving too much information to us investors after the initial investment is received. Every investor wants regular information from companies taking their money. Requirements created by investment documents.

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Stock Options Balance Sheet Stock Common Stock 48

Gust

MAY 24, 2012

Yet I’m skeptical that a widespread shift will occur anytime soon, and for reasons discussed below, as much as I admire and advocate for talented entrepreneurs, I believe it would be a losing proposition for nearly all involved. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

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IPO Equity Common Stock Stock 159

blog.simeonov.com

FEBRUARY 22, 2010

Even if you are an experienced entrepreneur, you’ve probably only seen a few founder agreements in your life. For her services, the consultant will own common stock equal to $50K/$2M or 2.5% These templates can have meaningful variations, some of which are founder-friendly and some of which are not.

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Founder Vesting Agile Startup 44

Professor VC

FEBRUARY 18, 2011

A stock acquisition is a bet that would provide significant upside (and possible downside) opportunity. I was curious about the sale price (not announced in any of the acquisition articles), but was disclosed in Linked-Ins S1 filing at cash proceeds of $2,394,000. Thus, I am raising my questions here. Steve Bennet. at 1:20 PM.

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Acquisition San Jose Angel Investor IPO 31

Startup Professionals Musings

SEPTEMBER 26, 2015

Most entrepreneurs looking for an investor can tell you how much money they need, but few have given much thought to what they are willing to give up for it. Even founder’s shares are common stock. Still, no one wants the terms to be so complex that the deal never closes. Board of directors participation.

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Term Sheet Demand Preferred Stock Liquidation Preference 120