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StartupPercolator

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Startup - Fundraising

June 7, 2013

Term Sheet Basics – Dilution

Dilution is a term that is frequently discussed in the context of preferred stock financings. However, it is important to understand that there is a difference between dilution in the general sense and the type of dilution with respect to which preferred stockholders receive protection.

Startup - Fundraising

May 10, 2013

Term Sheet Basics – Pre-money Valuation

“Pre-money” or “pre-money valuation” is a term that entrepreneurs will hear and use a lot in the context of securing equity financing, so I thought it would be a good idea to make sure entrepreneurs have a clear understanding of it.

Startup - Governance and Risk Management

March 29, 2013

"Backdating" In M&A?

The date of an agreement is an important part of most business transactions and M & A is no exception. Many acquisition agreements begin with an “Agreement between” the parties “effective as of” a given date. Does it matter if this effective date is prior to the date the parties actually entered into the agreement? And if so, is this ‘backdating’ problematic or even potentially illegal?

Startup - Fundraising

March 13, 2013

Promising Board Seats to Your Investors the Right Way

A commonplace among emerging companies is the need to promise investors seats on the board of directors. For a lot of different reasons, it makes sense to make this promise. It is usually a condition to receiving the investor’s capital, so there’s that.

Startup - Governance and Risk Management

March 7, 2013

M&A Tips for the Bootstrapped and Early-Stage Technology Startup

You've developed your idea into a business. It's taken a lot of sweat and hard work, and there have been more than a few rough spots. Acquirers are now taking note and making inquiries. Maybe investment bankers are courting you. You have arrived!! Well, almost . . . .

Startup - Fundraising

March 1, 2013

Back to Basics: What Should Be Covered in Your Executive Summary?

Potential investors usually request an "Executive Summary" prior to meeting with new startups. The Executive Summary is a one- to two-page document that covers the aspects of the startup that investors care about most, including the concept, the market need and opportunity, and the startup team.

Startup - Fundraising

January 25, 2013

Vesting Basics – What is vesting?

“Vesting” is a term of art that is often glossed over by new entrepreneurs as they grapple with other newer and scarier terms to which they are being introduced as they start their companies, like “pre-money valuation,” “fully-diluted capitalization” and “broad-based weighted average antidilution adjustments.”

Startup - Fundraising

January 15, 2013

Basics Of Convertible Note Financings

Convertible notes are a common structure for private company financings, most often for early stage companies trying to raise $1 million or less (see "Your First Vehicle for Fund Raising: Convertible Notes or Preferred Stock"). Here is a summary of the types of terms for such financings, and a quick primer on what to look out for if you’re considering this type of funding.

Startup - Intellectual Property

January 10, 2013

Privacy by Design

Starting a consumer-facing technology company or developing a new application to make a consumer's life easier or more fun is an exciting journey. At this stage, you are all about the development, getting the product or service to market, and making sure it can scale.

road through mountains

January 2, 2013

Old Advice is Good Advice – Keep it Simple

As founders, you are likely very familiar with the multitude of obstacles that a successful venture must overcome: financing, management, creation and protection of valuable intellectual property, marketing, and building profitable and sustainable customer relationships.

road through mountains

December 26, 2012

Establish a Culture of Giving

A company's culture is often established in its earliest days. Once ingrained, it can be very difficult to change. Although many founders recognize the importance of infusing a culture of giving into their enterprises, they wonder how they can go about it with limited time and resources. The answer should be apparent to every founder.

Startup - Equity Compensation

December 13, 2012

Paying Consultants and Strategic Partners with Equity

At one time or another, most startup companies work with a consultant or enter a contract with a strategic partner and are presented with a dilemma: should the company offer equity to the consultant or strategic partner in payment for services?

Startup - Employees

November 27, 2012

Never Do Tomorrow What You Can Do Today – Make Sure Your Agreements Assign Intellectual Property Presently!

Founders should make sure that their companies’ agreements assign intellectual property presently.

road through mountains

November 20, 2012

50-50 "Partnerships" Only Work in Fairy Tales

One of the most common conversations I have with the founders of businesses involves how they determined a way to split the ownership amongst themselves. It is probably the first difficult decision new partners face together in starting a company. In many instances, the new founders decide that they are going to split ownership equally.

road through mountains

November 13, 2012

"What" and "Where"? Initial Issues to Consider When Forming A New Entity

Founding a company can be an overwhelming experience, but for those founders looking to raise capital from angel or venture capital investors, deciding where to incorporate and selecting an entity type are two choices that deserve careful consideration.