Founding stages for startups and basic documentation

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Founding stages for startups and basic documentation

  1. 1. STARTUP LEGALFounder Institute session2013-05-20
  2. 2. Agenda• How Founding Works?• Documentation
  3. 3. Stages of Founding• Internal founding– Founder– Co-Founders– Friends and Family (…and Fools)• External founding– Seed round– Round A, B…– IPO
  4. 4. Internal foundingFounderPLN 0Founder100%$Stages
  5. 5. Internal foundingCo-foundersPLN 10,000Founder50%Co-Founder50%$Stages
  6. 6. Internal foundingFamily&FriendsPLN 20,000Founder37,5%Co-Founder37,5%Uncle5,0%Optionpool20,0%$Stages
  7. 7. External foundingSeed roundPLN 200 k(at PLN 1 M valuation)Founder31,2%Co-Founder31,2%Uncle4,2%Seedfund16,7%Optionpool16,7%$Stages
  8. 8. External foundingRound APLN 2 M(at PLN 4 M valuation)Founder19,2%Co-Founder19,2%Uncle2,6%Seedfund10,3%Firstemployee1,8%VC33,3%Optionpool13,6%$Stages
  9. 9. External foundingIPOPLN 235 M(at PLN 2,6 bln valuation)Founder17,6%Co-Founder17,6%Uncle2,4%Seedfund9,5%Firstemployee1,7%VC30,5%Public8,3%Optionpool12,4%$Stages
  10. 10. Agenda• How Founding Works?• Documentation
  11. 11. US vs PL documentsUSA• Term Sheet• Stock Purchase Agreement• Certificate Of Incorporation• Investor Rights Agreement• Voting Agreement• Right of First Refusal and Co-Sale Agreement• Management Rights Letter• Indemnification Agreement• Model Legal OpinionPL• „Term Sheet” - opcjonalnie• Umowa inwestycyjna• Zmiany do umowy spółki
  12. 12. Term sheet• A term sheet is a bullet-point document outlining the materialterms and conditions of a business agreement– It implies the conditions of a business transaction• A term sheet generally covers the more important aspects of adeal, without going into every minor detail and contingencycovered by a binding contract– For example, a term sheet from a venture capital company that isinvesting in an early-stage company may contain such details as: theamount of investment, the percentage stake sought, anti-dilutiveprovisions and valuation• Used to prepare final agreement– Binding (all terms are obligatory)– Non binding (it guides, but is not necessarily binding the final terms oftheir agreement)
  13. 13. Term sheet should include:• Closing Date• Investors• Money raised (the investment)• Price Per Share• Pre-Money Valuation• Capitalization (structure of capital)• Additional Clauses (optionally):– Dividends– Voting Rights– Drag-along rights („Pociągnięcie”)– Tag-along rights („Przyłączenie”)– Liquidation Preference– Participation Preference– Anti-dilutive– Clawback– ect.
  14. 14. THANK YOUmarcin.zabielski@hedgehogfund.pl
  15. 15. Sources
  16. 16. Sources• http://en.wikipedia.org/wiki/Term_sheet• http://nvca.org/index.php?option=com_content&view=article&id=108&Itemid=136• http://www.investopedia.com/

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