Anti-Dilution – The Good, the Bad and the Ugly

Shares that are sold by a company, usually in the case of issuance, result in existing investor-holding dilution, unless they participate, of course. To protect their investments, sophisticated investors have introduced a variety of mechanisms to the venture capital world. One of these important mechanisms is anti-dilution. Anti-dilution protection is exercised by holders of preferred … Read more Anti-Dilution – The Good, the Bad and the Ugly

Five Most Important Things Your Founders’ Agreement Has to Include

Founding a company is a lot like getting married. During the honeymoon period, everything looks promising for the newlywed couple, but as the relationship evolves, complexity and tension become more familiar to them, and issues like property, money, and children become magnified. People try to solve these issues by putting pre-nup agreements in place. A … Read more Five Most Important Things Your Founders’ Agreement Has to Include

Purpose of Valuation Cap in SAFE

tips for companies and startups

SAFE is an agreement used by startups mainly to raise funds during their seed financing rounds. By using a SAFE, investors invest capital in the company, which converts into equity upon certain trigger events, most commonly a subsequent financing round. A SAFE could contain investor-“friendly” economic mechanisms, such as discount and valuation cap, the first … Read more Purpose of Valuation Cap in SAFE

No Shop Provision in Term Sheet and its Implications

term sheets startups

A term sheet outlines the rights and obligations of parties involved in private equity transactions. Generally speaking, most term sheets being provided by venture capital firms or potential acquirers are non-binding, with only two provisions considered to be binding upon the transacting parties – confidentiality and no-shop (also referred to as “exclusivity”). There are important … Read more No Shop Provision in Term Sheet and its Implications

Why and Where You Should Incorporate Your Next Startup

Why and Where You Should Incorporate Your Next Startup - Photo

Not sure why and how you should incorporate your startup? Considering several alternatives? Incorporating a new startup is usually a very technical and mostly simple process that requires filling out documents and signing standard forms. There are, however, several elements to consider with your advisors before rushing into this process. Why should you incorporate? It’s … Read more Why and Where You Should Incorporate Your Next Startup

Five Things to Remember about Finders’ Agreements

Do you need to raise capital for your company? If you haven’t yet, you will probably soon be introduced to yet another link in the venture capital world food chain: “finders”. Finders usually come with the promise of saving you time and introducing you and your company to fast, available cash. While in some cases … Read more Five Things to Remember about Finders’ Agreements