Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

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Finance Software Review Term Sheet Liquidation Preference 70

The Next Web

JUNE 15, 2012

From Silicon Valley to Peoria, Illinois, cash-strapped startups look for inventive way to finance their business – often handing out equity to employees, consultants, vendors, and other service providers. Speed is often of the essence early on in the startup lifecycle, and that often means rushing into casual arrangements.

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Equity Stock Options Vesting Stock 116

Up and Running

SEPTEMBER 19, 2017

Capital investments are like gasoline on a startup business’s metaphorical fire. If you’re like most startup CEOs, your startup has been your personal fiefdom and baby. Background: Justin Klemm’s analytics and website uptime startup, Ghost Inspector , wants to revolutionize the way businesses manage their ecommerce funnels.

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Private Equity Pre-Money Valuation Equity Startup 94

YoungUpstarts

JUNE 26, 2020

by Rizwan Virk, author of “ Startup Myths and Models: What You Won’t Learn in Business School “. If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. My first institutional financing came from people who were in the “MIT” network.

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Finance Silicon Valley Valuation Startup 205

Both Sides of the Table

SEPTEMBER 8, 2012

I recently wrote about my views that startups rounds should be priced. But Paul Graham really did have a point in his “ high resolution fundraising ” post – that there is a problem – particularly in angel financing – with herding cats. Almost every startup needs an anchor. And a few others.

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Pre-Money Valuation Finance Liquidation Preference Warrant 294

Startup Company Lawyer

AUGUST 31, 2012

Over the past few years, convertible debt has emerged as a quick and inexpensive method for startup companies to raise money from angel investors and early stage venture funds. One major concern about convertible debt is that it eventually needs to be repaid if another round of financing doesn’t occur. Background.

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Convertible Security Equity Security Preferred Stock 73

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. 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.

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Venture Capital Liquidation Preference Valuation Term Sheet 417

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. 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. Of the Inc. raised from angels.

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Cofounder Technical Review Equity Dividend 78

Steve Blank

APRIL 26, 2022

At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose. This article previously appeared in TechCrunch.

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Cram Down Founder Venture Capital Recapitalization 417

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.

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Term Sheet Valuation Dividend Liquidation Preference 68

Austin Startup

JULY 6, 2018

Background Reading: Why startups need signals. More traditional and comprehensive programs often require 5–8% of common stock, but often provide between $20K and $100K up-front as well. See: Startup Accelerator Anti-Dilution Provisions; The Fine Print. Anti-Dilution. Originally published at Silicon Hills Lawyer.

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Dilution Startup Technical Review Equity 48

keen.io

FEBRUARY 5, 2013

How I negotiated my startup compensation. When I started thinking about joining Keen, I quickly realized there is a lot I don’t know about startups. For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. I knew enough to know I wanted to join a startup.

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Salary Equity Startup San Francisco 50

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

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 Dividend 289

Scott Edward Walker

NOVEMBER 22, 2015

For many startups, intellectual property (IP) is their most valuable asset. Below are the three most common IP-related mistakes that startups make — the first of which I discuss in this brief video with Jason Calacanis. This is a particular concern if the startup is in the same space as a founder’s prior employer.

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IP Software Review Due Diligence Intellectual Property 40

Startup Professionals Musings

SEPTEMBER 14, 2010

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Marty Zwilling.

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

www.inc.com

SEPTEMBER 24, 2011

Finance | Tuesdays. Advisor. ); STARTUP. Financing a Small Business. Financing A Small Business. Personal Finance. 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. Innovation | Fridays.

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Arizona Equity Iowa Venture Capital 40

Business Plan Blog

NOVEMBER 13, 2013

Most startup founders do not have enough capital to launch their companies and need to raise money at some point. Individual investors who provide financial funding to startups are called ‘Angel Investors.’ Convertible Debt Financing. Convertible debt provides startups with a relatively easy way to procure financing.

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Finance Accredited Investor Angel Investor Seed Capital 93

Scott Edward Walker

OCTOBER 19, 2020

Over the past six months, my firm has been engaged by a number of startups with significant intellectual property (“IP”) problems. The purpose of this blog post is to briefly discuss the three most common IP mistakes that startups make. working on the startup) while employed. Introduction. code, designs, logo, etc.)

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IP Software Review Founder Technical Review 40

Startup Professionals Musings

JANUARY 27, 2012

As the company grows and the second or third group of investors comes in, the terms of each subsequent financing grow in size, scope, and the number of lawyers’ fingerprints on them. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold.

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Term Sheet Pre-Money Valuation Due Diligence Angel Investor 223

Gust

OCTOBER 12, 2011

Last week , we took the plunge and began dissecting an example term sheet for a convertible debt financing round piece by piece. 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.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

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. Invested Interests company early stage funding investors startup starup'

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Warrant Preferred Stock Early Stage Common Stock 157

venturehacks.com

MARCH 21, 2008

Venture Hacks Good advice for startups. Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options. Advisory shares are normal common stock. Disclaimer: This is not legal advice. See Part 1 for the rest. What are advisory shares?

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Advisory Board Cap Table Vesting Equity 44

Startup Company Lawyer

MAY 4, 2009

The driving beliefs behind the Institute are that (1) great founders are often overlooked by the current entrepreneurial ecosystem, and that (2) innovative startups have a dramatic positive effect on the global economy. Description: What are the typical stages of the funding life cycle for different types of startup businesses?

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Founder Warrant San Francisco Intellectual Property 28

Scott Edward Walker

APRIL 9, 2012

Introduction We are in the golden age of seed financing. Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook.

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Preferred Stock Finance Common Stock Liquidation Preference 87

Up and Running

AUGUST 17, 2015

Additionally, I had already studied Economics and Finance during undergrad, making the academic part of an MBA seem a little redundant. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). It helps mitigate startup risk. Is business school really necessary?

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Entrepreneur Cofounder Angel Investor eCommerce 60

ReadWriteStart

JANUARY 28, 2022

With the rise of startups and growing businesses , it has become more critical for investors to have a thorough understanding of equity to be aware of all of the advantages they are receiving from the companies they have invested in. Common stock. The holding of common stock in a company indicates ownership in the corporation.

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Valuation Equity Warrant Common Stock 108

www.mattbartus.com

SEPTEMBER 24, 2011

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. Sometimes the consultant has a reasonable basis to think this, since lean startups are programmed to get things for free and may call on the consultant from time to time for free advice. A View from the Valley.

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Equity Vesting Silicon Valley Intellectual Property 40

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). Seems like a win-win. The investor suggested to the faculty member that the investment be convertible debt.

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Common Stock Stock Cap Table Preferred Stock 45

ReadWriteStart

MAY 8, 2012

Approaching investors for the first time is a daunting exercise for any startup. The best way to do that is to leverage the hard-won experience of real-world startup. Turns out that while every startup is unique, they share some common difficulties in trying to find just the right strategies and tactics for funding their companies: 1.

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Cofounder Startup San Francisco Silicon Valley 140

Gust

OCTOBER 21, 2011

To account for scenarios in which the startup is acquired before it has a chance to complete a priced equity financing round, most term sheets and deal documents contain a “ change in control ” provision. Suppose the notes converted as if the acquisition were an eligible financing round.

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Finance Pre-Money Valuation Term Sheet Liquidity Event 79

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. It’s called restricted stock because it often comes with restrictions, such as vesting. See Also: 10 Tips for Dealing With Startup Stock Options.

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Equity Employee Stock Options Vesting 60

Scott Edward Walker

MAY 15, 2012

This post is the third part of a three-part primer on convertible note seed financings. Part 1, entitled “ Everything You Ever Wanted To Know About Convertible Note Seed Financings (But Were Afraid To Ask) ,” addressed the basics. Part 2, entitled “ Convertible Note Seed Financings: Econ 101 for Founders ,” addressed the economics.

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Finance Founder Accredited Investor Preferred Stock 64

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

The Startup Magazine

NOVEMBER 14, 2018

Startups and entrepreneurs will accumulate bitcoin and cash, hopefully. While investing in stocks, cryptocurrency, and companies can boost your wealth in less time, choosing the right path to take is essential to avoid missing out on growth opportunities. Stock Options. appeared first on The Startup Magazine.

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Common Stock Stock Stock Options Startup 108

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. Pre-money valuations startups receive from incubators are typically low…really low.

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Incubator Pre-Money Valuation Option Pool Advisory Board 105

The Startup Lawyer

DECEMBER 10, 2015

A startup founder’s desire to hold equity better than plain-vanilla common stock isn’t new. Several years ago, Series FF stock for founders was all the rage when it came to founder liquidity at subsequent financing rounds. We implemented Series FF for a handful of clients back then but we haven’t done so recently.

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Common Stock Stock Founder Equity 40