Seed Rounds

X Does Not Always Equal X

I’ve done quite a few recent seed deals using various ‘standard’ seed financing docs (Series Seed, TechStars Series AA, etc.). While using these document sets can help reduce transaction costs and the time to close, a startup can run into trouble by trusting deal documents without verification. For example, a startup requested I review a … Continue reading

Non-Dilution Rights are Wrong

I hate non-dilution rights and if you are an entrepreneur you should, too. I’m not talking about price-based anti-dilution protection that is typical in an angel or VC round. What I’m referring to is a right given to a particular stockholder so that such stockholder’s equity in the company is not diluted by any future … Continue reading

Why Finders Are Losers

Whenever a startup considers paying a “finder” for successful investor introductions, I have the same type of conversation with the founders that goes something like this: — Startup: “Finder” knows a lot of investors and he’ll introduce us if we pay him [6]% of all capital raised through the introductions. Me: Is “finder” a registered … Continue reading

Convertible Note Term Sheets

Just like the preferred equity financing process, the convertible debt financing process can start with a term sheet, rather than a full set of financing documents. A convertible note term sheet is beneficial because it postpones a lawyer from cranking out a full set of docs until consensus is reached regarding the convertible debt offering’s … Continue reading

Update to Accredited Investor Definition

The Dodd-Frank Wall Street Reform and Consumer Protection Act probably won’t fix or prevent anything, but it was successful at modifying a portion of the definition of an accredited investor. Official Language in the Dodd-Frank Act: ———- SEC. 413. ADJUSTING THE ACCREDITED INVESTOR STANDARD. (a) IN GENERAL.—The Commission shall adjust any net worth standard for … Continue reading