Category: Venture Capital & Term Sheets
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Don’t Hate On Your VC For Exercising Anti-Dilution Provisions
There’s a lot of talk about down rounds now in the venture capital industry since valuations are down. So I suspect a lot of venture-backed companies are dusting off their Series A Preferred Share Agreements and taking a look at the anti-dilution provisions held by their investor(s). But should your founding team be offended if…
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Preferred Stock: Where “F” in a Class Can Equal Success
If you pay any attention to TechCrunch or Venturebeat, you’ll see stories titled “Startup Raises $X Million in Y-round Financing.” When the “Y” in story is a large number, do not assume that the startup company is tanking. Instead, the startup could be gaining momentum and approaching positive cash flow…but just needs one more round…
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I Got a Term Sheet, Now What?
Getting a term sheet from an investor is like getting an invitation to the Prom in January–you’ve got a long way to go before you dance. When you get a term sheet from a VC or angel investor, you need to decide whether the economics of the deal feel right. And you also have to…
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When To Fire a Startup Company’s Founder-CEO
When should a founder be replaced as CEO of a venture-backed company? The topic is obviously a touchy one for a startup founder that brought early success to a company. But while a founder might have been successful leading the startup to a funding event, can the founder also lead the startup to a liquidity…
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Shouldn’t the Standardization of Venture Capital Documents Lead to Reduced Legal Fees?
As an industry, venture capital is relatively young. Yet it has been around long enough–through busts and booms–that it will not simply go away as some might have you think. Venture capital is a legitimate industry which is now being enhanced through standards and patterns. Documentation is one area that is trending towards consistency in…
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What is a Pre-money and Post-money Valuation?
When a startup raises capital, valuation is main economic term that must be tackled. The two main ways valuation is expressed in venture capital financings are what’s known as the “pre-money valuation” and the “post-money valuation”. The startup’s valuation immediately before the venture capital investment is called “pre-money valuation” while the startup’s valuation immediately after the venture capital financing is closed…
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Why Startups are a Corporation for Venture Capital
Why Your Startup Company Will Need to be a C Corporation to Raise Venture Capital
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What is a Private Placement?
While no true definition of a private placement exists, it is commonly used to refer to the raising of capital (i.e., “securities”) without making a registration with the United States Securities and Exchange Commission (SEC). Under the Securities Act of 1933, any offer to sell securities must either be registered with the SEC or meet…
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What is Preferred Stock?
A definition of preferred stock and how it benefits startups and investors
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Flipping Your International Startup for U.S. Venture Capital
The Benefits of Moving Your International Startup to America for Venture Capital and Acquisitions