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Just a few of these terms include vesting, corporate structure, governance principles, financing strategy, valuation and exit strategy. As an example, twenty five years ago, most VCs used common share dealstructures. It was not until the later 1980s that the preferred share structure became popular.
The government, for example, often defines small business by the number of employees. Let's talk about some of the dealstructures you've seen. I mean, is that considered cash flow or is that considered an expense of the business? So, that's a great question. Banks are gonna have different sets of definitions. 09:23): Sure.
By the same token, using a competent accountant for tax advice can help you maximize the dealstructure to limit your tax exposure and maximize the cash potential in the sale. Relationships tie into the issue of governance. Governance should never be a big issue.
I have to admit my West Coast bias here, having learned the ropes at a large Silicon Valley firm ; it makes little sense to me to have investor’s counsel drafting documents that are woven into the fabric of a company’s governance and capital structure, with which the company will likely be living for years after the investment is made.
I’ve been looking for suggestions for an initial dealstructure that is appropriate for the theoretical case of a trusted dev shop putting in $100k in market-value of services over a 6 month period in time. Many industries are very difficult to penetrate from the outside, e.g. healthcare, education, government services, and more.
As all good sales VPs will tell you, the compensation plans of the sales team will drive behavior, so it is critically important that you structure the sales and account management plans to align with the key metrics of your business: CMRR, Churn, and Cash flow. but focus is a good thing.
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