Law & Order:Financing Optionsfor Startups February 12, 2013 Nicole Moss (617) 816-8220 firstname.lastname@example.org
DisclaimerThe information presented herein and the surroundingdiscussion are provided for educational or informationalpurposes only. The information presented herein is notnecessarily applicable to any particular situation herein ordiscussed in the course of this presentation. By providing thisinformation and engaging in discussion, no legal advice isprovided hereby and no attorney client relationship or privilegeis being established. Every business and every issue is uniqueand legal questions or issues should be directed to yourattorney.
Org ChartShareholder #1 – 50% Liquidity Event: $1000Shareholder #2 – 30%Shareholder #3 – 20% Distribution: $1000 Waterfall: - outstanding debt Company - shareholders pro rata Assets
Common Stock• For cash, in-kind, in lieu of compensation• = a Security• Governed by: • Federal & State Securities Laws • State Corporate Laws • Certificate of Formation (public) • Bylaws • Other Agreements – Shareholders’, Investors’ Rights…
Preferred Stock• Like Common PLUS• Liquidation Preference• Convertible• Superior Voting Rights/Protection• Anti-dilution – ROFR, Participation
Preferred #1 – 50% Org ChartShareholder #1 – 25% Liquidity Event: $1000Shareholder #2 – 15% Distribution: $1000Shareholder #3 – 10% Waterfall: - outstanding debt Company - Preferred shareholders pro rata - Common shareholders pro rata Assets
Warrants & Options• Not an Equity, but still a Security• Exercise Threshold• Strike Price• Warrants -> Transactions• Options -> Compensation
Hybrid Structures• Loans with PIKs, Warrants• Convertible Notes