1. Accessing Capital
As An Entrepreneur
Leslie A. Keil
Chair, Sustainable Business & Impact Investing Group
@LeslieKeilEsq
lkeil@hansonbridgett.com
September 11, 2015
Workshop
For
Tech Inclusion Conference 2015
2. Access to Capital Challenges
• Limited Initial Resources
• Limited Access
• Limited Network
• Under Represented
The Golden Rule
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6. Convertible Debt
Example
• Total loaned = $1,000,000
• Automatic Conversion upon “Qualified Financing”
• Qualified Financing = $2,000,000
• Loan converts into equity according to the following formula:
(Balance of loan + interest accrued)
Per Share price in Qualified Financing
• Thus, if $2,000,000 raised in a Qualified Financing at $1.00 a share, amount
loaned converts into 1,000,000 shares; if $2,000,000 raised at $0.50 a
share, the amount loaned converts into 2,000,000 shares
• Effect of 20% Discount:
– Discount applies to the per share price at which the loan would otherwise convert.
– If the $1,000,000 loan would otherwise convert at $1.00 a share, the discounted conversion
price becomes $0.80 a share, yielding 1,250,000 shares on conversion rather than 1,000,000
– If the $ $1,000,000 loan would otherwise convert at $0.50 a share, the discounted conversion
price becomes $0.40 a share, yielding 2,500,000 shares on conversion rather than 2,000,000
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7. Angel Killers
• No Term Sheet
• Variance from Term Sheet
• Hiding the Ball / Due Diligence Surprises
• Cap Table Problems
• Management Structure / Team
• Material Contracts & Agreements
• Board Composition
• No Clear Exit Strategy
• Too Many Cooks
• Lack of IP / Inadequate IP Protection
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