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.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Scott Edward Walker

JUNE 9, 2011

As many of you know, VC investors are typically issued shares of preferred stock, not common stock. Indeed, preferred stock, as the name suggests, is preferable to (and more valuable than) common stock because it grants certain key rights to the holders, one of which is a conversion right.

Term Sheet 60

Term Sheet Conversion Rights Venture Capital Liquidation Preference 60

Scott Edward Walker

MAY 15, 2012

There are variations and complicated language that are typically negotiated to address the conversion right; however, the bottom line is that the noteholders would be able to share in any upside if the startup were acquired. 3) Premium (Intermediate Approach). Sophisticated investors, however, will push back hard against such a provision.

Finance 64

Finance Founder Accredited Investor Preferred Stock 64

Scott Edward Walker

SEPTEMBER 21, 2011

Tips #3: Unless You’re Raising $750,000 or More, Issue Convertible Notes. Finally, unless the startup is raising at least approximately $750,000, it generally is not in the company’s interest to issue shares of preferred stock. What about issuing shares of common stock?

Preferred Stock 45

Preferred Stock Angel Investor Entrepreneur Common Stock 45