Downloaded 10 times
Uploaded byPlatform Houston
Financing Options for Startups by Nicole Moss
This document discusses various financing options for startups, including equity sources like founders, angels, accelerators, seed funds, and VC funds, as well as debt sources like credit cards, promissory notes, and loans. It provides examples of equity structures like common stock, preferred stock, warrants, and options. It also describes different types of debt structures and their key terms, such as interest rates, repayment schedules, guarantees, and collateral.
More Related Content
Similar to Financing Options for Startups by Nicole Moss
Financing Options for Startups by Nicole Moss
- 1. Law & Order: FinancingOptions for Startups February 12, 2013 Nicole Moss (617) 816-8220 nmoss@campbellriggs.com
- 2. Disclaimer The information presentedherein and the surrounding discussion are provided for educational or informational purposes only. The information presented herein is not necessarily applicable to any particular situation herein or discussed in the course of this presentation. By providing this information and engaging in discussion, no legal advice is provided hereby and no attorney client relationship or privilege is being established. Every business and every issue is unique and legal questions or issues should be directed to your attorney.
- 3. Sources of Fundsfor Startups
- 4. Sources of Fundsfor Startups • Founding Team • Banks • Friends & Family • Mezzanine Funds • Angels • Private Lenders • Super Angels • Crowdfunding • Accelerators, etc. • Grants • Seed Funds • VC Funds
- 5. Categories of FundSources • Equity • Debt • Hybrids
- 6. Debt Structures • CreditCards • Promissory Notes • (Convertible Notes are hybrids) • Loans
- 7. Credit Cards • HigherRates than other Debt • Compounding Interest
- 8. Promissory Notes • Principal •Interest • Repayment Structure • Prepayment • Default • Personal Guarantee (maybe)
- 9. Super-Simple Org Chart Shareholders Company Assets
- 10. Super-Simple Org Chart Shareholders Personal Guarantee Debt document secured by Company guarantee or collateral or both Assets Collateral
- 11. Loans • Same asP-Notes PLUS • Covenants • Reps & Warranties • Bringdowns • Diligence • Secured with Assets/Collateral, Guarantees • UCC Filings
- 12. SBA Loans • Sameas Regular Loans PLUS • More Paper • Longer Payment Schedule • No/Lite Prepayment Penalties • Lighter Covenants • Non-recourse (maybe)
- 13. Equity Structures • CommonStock (or membership units in an LLC) • Preferred Stock • Warrants & Options
- 14. Super-Simple Org Chart Shareholders Company Assets
- 15. Simple Org Chart Shareholder#1 – 50% Shareholder #2 – 30% Shareholder #3 – 20% Company Assets
- 16. Org Chart Shareholder #1– 50% Liquidity Event: $1000 Shareholder #2 – 30% Shareholder #3 – 20% Distribution: $1000 Waterfall: - outstanding debt Company - shareholders pro rata Assets
- 17. Common Stock • Forcash, 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…
- 18. Preferred Stock • LikeCommon PLUS • Liquidation Preference • Convertible • Superior Voting Rights/Protection • Anti-dilution – ROFR, Participation
- 19. Preferred #1 –50% Org Chart Shareholder #1 – 25% Liquidity Event: $1000 Shareholder #2 – 15% Distribution: $1000 Shareholder #3 – 10% Waterfall: - outstanding debt Company - Preferred shareholders pro rata - Common shareholders pro rata Assets
- 20. Warrants & Options •Not an Equity, but still a Security • Exercise Threshold • Strike Price • Warrants -> Transactions • Options -> Compensation
- 21. Hybrid Structures • Loanswith PIKs, Warrants • Convertible Notes
- 22.