The liquidation preference is the amount that must be paid to the preferred stock holders before distributions may be made to common stock holders. The liquidation preference is payable on either a liquidation of the company, asset sale, merger, consolidation or any other reorganization resulting in the change of control
TechStars released a set of model seed funding documents that they use as a staring point for their seed stage financings. The model seed funding documents include: Term Sheet. This sets out the terms of the proposed seed investment into your startup and alsos include the proposed cap table (reflecting
I previously mentioned that convertible debt is a good way to raise capital for most startups. The main reason why convertible debt is beneficial for startups is that it delays coming up with a valuation figure at the seed stage–the valuation conundrum is essentially punted to the Series A (or
Selecting the optimal structure when raising capital for your startup can be a challenging task. When clients ask me for my recommendation, I find myself recommending the convertible debt financing route more often than traditional equity financing (i.e., I’ll give you $100k for 20% of your company’s stock). So what
I loved Pitch Camp. Flip Flops. Free donuts and pizza. Hours of “unauthorized” advice from the angel investor, venture capital, and journalism communities. It sure beat the heck out of any legal conference I’ve ever attended. At Pitch Camp, a fund’s partner told the crowd that he turned down a
I wanted to give my initial thoughts on the Y Combinator Series AA Angel Investor Legal Documents that were officially released late last week. I plan to write a document-by-document breakdown in the coming week: Term Sheet – August 29th Stock Purchase Agreement – August 30th Board Consent – August
I could use more palm trees here in Dallas and while I’m at it a Togo’s. However, the “City of Angels” reference in this post’s title is about bridging the gap between entrepreneurs and angel investors rather than going “Under the Bridge.” The startup ecosystem in Dallas is discombobulated if
Y Combinator and Wilson Sonsini Goodrich & Rosati are happy to announce the Series AA Equity Financing Documents. The Y Combinator documents are back up again–grab them while you can. At first glance, it looks like they added a term sheet. And now each document comes with a fancy new
I saw this TechCrunch article in my RSS reader and thought I would pass it on to you: Social Median Disregards 60 Years of Securities Regulations With Sale of Stock on Twitter I’m a new user of Twitter and I believe it can be used for a lot of things.
I mentioned last week that Y Combinator was open sourcing their angel funding legal documents. I also noted that soon after the documents were made public, people (myself included) received this error message visiting the documents’ URL: Sorry, there’s a glitch with the documents and we had to take them
