TAKING THE MONEY - The 411 On Startups (tm)

Series Seed Financing Documents

Sep

2011

…. I think this quote accurately captures the life-cycle of creating a simple set of documents for early stage investment. I’ve attached version 2.0 of the Series Seed Documents as well as a red-line showing the changes I’ve made from the original set. If you peruse the red-line, you will see that there are not ...

Series AA Equity Financing Documents

Sep

2011

Y Combinator and Wilson Sonsini Goodrich & Rosati are happy to announce the Series AA Equity Financing Documents. Their goal is to make angel funding rounds for startups easier for both sides. These documents were originally created for YC-funded startups to use when raising angel rounds. They seem to have worked well in trial runs ...

Term Sheet Generator – WSGR

Apr

2009

This tool will generate a venture financing term sheet based on your responses to an online questionnaire. It also has an informational component, with basic tutorials and annotations on financing terms. This term sheet generator is a modified version of a tool that we use internally, which comprises one part of a suite of document ...

Multiple Preferred Stock Rounds | The Startup Lawyer

Dec

2008

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 to get over the top. Rounds of financing ...

What does a convertible note bridge financing term sheet look like? : Startup Company Lawyer

Oct

2008

Here you will find the general form of a convertible note. Also, by browsing the entire convertible note section on this blog, you will find answers to many questions on these notes and bridge loans.

Redeye VC: Bridge Loans vs. Preferred Equity

Oct

2008

I, like most investors, have a strong point of view on the topic — and wanted to share my thoughts. In general, I have a strong preference for Preferred Equity. While there are a few circumstances where I would go with a Convertible Note (which I’ll outline later), I believe that: * Preferred equity better ...

High Tech Startup Valuation Estimator

Oct

2008

(Note: the best way to use this valuation estimator is to answer the questions, see the valuation, and then change an answer or two to see the effect.)Wondering what your pre-money valuation will be if a VC ever puts a term sheet on the table? Valuing a startup is intrinsically different from valuing established companies. ...

What is preferred stock and why is it issued to investors? : Startup Company Lawyer

Oct

2008

(Note: read the comments on this blog page.) Preferred stock generally has rights senior to common stock. Startup companies typically issue common stock to founders (and options to purchase common stock to employees) and preferred stock to investors. One reason for issuing preferred stock to investors is to preserve the ability of a company to ...

Reasonable pre-money valuations for startups

Oct

2008

(Note: read the comments on this blog’s post since numbers change with the investment environment. The post does point to process though). The operable word, valuation, in the phrase ‘pre-money valuation’ is really a misnomer. Typical angel or venture capital investors aren’t really attempting to determine ‘value’, but instead they are attempting to determine ‘price’. ...

Due Diligence — What VCs (and Enrepreneurs) Should Look For

Oct

2008

Most VCs generally break this down to 1) market; 2) technology; 3) financial; and 4) ‘operations’…..The entire due diligence exercise serves, at a minimum, to identify and mitigate the risks associated with the deal to the extent necessary honor the VC’s fiduciary duties to its LPs. Here’s a laundry list of questions entrepreneurs should be ...