This document summarizes key points from a presentation on term sheet negotiations. It discusses how to allocate value between investors and founders regarding valuation, capitalization, liquidation preferences, dividends, and other terms. It also covers managing the company through board composition, protective provisions, and drag along rights. Investor rights like right of first offer, anti-dilution, right of first refusal, and redemption are examined. Recommendations are provided on negotiating favorable terms for founders.
Term sheets explained by viral rathod, everstone capital advisors at the work...tiemumbai
Viral Rathod, Everstone Capital Advirsors explains the various clauses in the term sheet, the exit strategies and other terms from both - an investor and entrepreneurs perspective. He highlights the key areas that an entrepreneur needs to focus on while entering into a investment deal and signing the term sheet.
Negotiating the Preferred Stock Term SheetBart Greenberg
This slide show outlines and discusses the key elements of a preferred stock term sheet, and shows the range of negotiability of those terms in the best and worst of times.
Term sheets explained by viral rathod, everstone capital advisors at the work...tiemumbai
Viral Rathod, Everstone Capital Advirsors explains the various clauses in the term sheet, the exit strategies and other terms from both - an investor and entrepreneurs perspective. He highlights the key areas that an entrepreneur needs to focus on while entering into a investment deal and signing the term sheet.
Negotiating the Preferred Stock Term SheetBart Greenberg
This slide show outlines and discusses the key elements of a preferred stock term sheet, and shows the range of negotiability of those terms in the best and worst of times.
Before Series A - Convertible Note and Series Seed Funding for Startups ldef2001
Presentation explaining the differences between Convertible Notes and Seed Stage Equity, the important terms of each funding structure and the pros/cons of each.
We are happy to share a template of the term sheet for pre-seed and seed financing that Openfund will be offering to entrepreneurs. This template shall not be treated as cast in stone, but rather as indicative of what founders shall generally expect from an Openfund offer, while each deal remains different.
Learn from Jeffrey Char (President & CEO of J-Seed Ventures, serial entrepreneur) how to negotiate a typical venture capital term sheet.
Takeaway
-understand the terms & conditions of a term sheet
-negotiating and structuring investment deals
-negotiating terms for the benefit of founding team
The MSA Launch (http://bit.ly/1yhQPZV) is a 5-day event aiming to provide an introduction to MaGIC Academy. It is presented as a condensed version of how MaGIC Academy is going to contribute to you and the startup community. You will be able to experience a series of workshops, skill and sharing knowledge opportunity, and mentoring with our selected network of mentors.
Website : www.mymagic.my
Facebook : https://www.facebook.com/magic.cyberjaya
Twitter : https://twitter.com/magiccyberjaya
Youtube :
SlideShare : http://slidesha.re/1BfSncP
Email : enquiries@mymagic.my
Pre-Series A Funding Vehicles ( Convertible Notes, SAFE, KISS, etc.)ideatoipo
Obtaining funding for early stage startups can be challenging. The array of funding options available to entrepreneurs can be confusing and fraught with pitfalls.
This presentation covers:
1) convertible notes
2) SAFE documents
3) KISS documents
and more!
Funding 101 for Tech Entrepreneurs & StartupsRoger Royse
Roger Royse, founder of the Royse Law Firm, discusses the various options available to entrepreneurs when it comes to funding their startup.
Topics include:
1) What are the best funding options for entrepreneurs to scale their business?
2) When should entrepreneurs pursue external funding?
3) How do entrepreneurs choose the right investor?
4) What alternative sources of funding are available?
5) How and why should a founder stage their funding rounds?
6) When should a founder think about exiting?
7) How can advisors help with the funding process?
How to Get Your Startup Ready for Venture Capital Funding (Idea To IPO)Roger Royse
Venture capital funding is seen as the holy grail for a startup, often improving the company’s chances of a big IPO or exit dramatically. Most companies start their lives with the hope, if not the expectation, that they will eventually receive venture funding. This presentation will cover what a company should do to prepare for venture funding, what steps to take, what the venture capitalists expect and how to avoid venture capital deal breakers.
The speaker will discuss:
1) what types of companies are candidates for venture capital funding
2) the essential assets, qualities or aspects that your company must have to approach a venture capitalist
3) how (and when) you should value your company for venture capitalists
4) how you can protect yourself against dilutive rounds, losing control and being removed from management
5) how to get your company in front of venture capitalists
and more!
Before Series A - Convertible Note and Series Seed Funding for Startups ldef2001
Presentation explaining the differences between Convertible Notes and Seed Stage Equity, the important terms of each funding structure and the pros/cons of each.
We are happy to share a template of the term sheet for pre-seed and seed financing that Openfund will be offering to entrepreneurs. This template shall not be treated as cast in stone, but rather as indicative of what founders shall generally expect from an Openfund offer, while each deal remains different.
Learn from Jeffrey Char (President & CEO of J-Seed Ventures, serial entrepreneur) how to negotiate a typical venture capital term sheet.
Takeaway
-understand the terms & conditions of a term sheet
-negotiating and structuring investment deals
-negotiating terms for the benefit of founding team
The MSA Launch (http://bit.ly/1yhQPZV) is a 5-day event aiming to provide an introduction to MaGIC Academy. It is presented as a condensed version of how MaGIC Academy is going to contribute to you and the startup community. You will be able to experience a series of workshops, skill and sharing knowledge opportunity, and mentoring with our selected network of mentors.
Website : www.mymagic.my
Facebook : https://www.facebook.com/magic.cyberjaya
Twitter : https://twitter.com/magiccyberjaya
Youtube :
SlideShare : http://slidesha.re/1BfSncP
Email : enquiries@mymagic.my
Pre-Series A Funding Vehicles ( Convertible Notes, SAFE, KISS, etc.)ideatoipo
Obtaining funding for early stage startups can be challenging. The array of funding options available to entrepreneurs can be confusing and fraught with pitfalls.
This presentation covers:
1) convertible notes
2) SAFE documents
3) KISS documents
and more!
Funding 101 for Tech Entrepreneurs & StartupsRoger Royse
Roger Royse, founder of the Royse Law Firm, discusses the various options available to entrepreneurs when it comes to funding their startup.
Topics include:
1) What are the best funding options for entrepreneurs to scale their business?
2) When should entrepreneurs pursue external funding?
3) How do entrepreneurs choose the right investor?
4) What alternative sources of funding are available?
5) How and why should a founder stage their funding rounds?
6) When should a founder think about exiting?
7) How can advisors help with the funding process?
How to Get Your Startup Ready for Venture Capital Funding (Idea To IPO)Roger Royse
Venture capital funding is seen as the holy grail for a startup, often improving the company’s chances of a big IPO or exit dramatically. Most companies start their lives with the hope, if not the expectation, that they will eventually receive venture funding. This presentation will cover what a company should do to prepare for venture funding, what steps to take, what the venture capitalists expect and how to avoid venture capital deal breakers.
The speaker will discuss:
1) what types of companies are candidates for venture capital funding
2) the essential assets, qualities or aspects that your company must have to approach a venture capitalist
3) how (and when) you should value your company for venture capitalists
4) how you can protect yourself against dilutive rounds, losing control and being removed from management
5) how to get your company in front of venture capitalists
and more!
Healthy Office Exercises that don't require you to leave your desk. All steps are clearly presented that will help you do exercise at your desk easily and quickly.
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"How to maximize your potential to attract US capital" by John Bautista TheFamily
By John Bautista, Partner at Orrick.
Join us IRL next time! http://meetup.com/thefamilyspecialevents
The contents of this video are intended for general information purposes only and should not be considered or construed as legal advice. The distribution of this presentation or its content is not intended to create, and receipt of it does not constitute, an attorney-client relationship. (The views set forth herein are the personal views of the presenters and do not necessarily reflect those of Orrick, Herrington & Sutcliffe.)
Equity Fundraising Founders Basics for Founders | Mohammed Elayan | Lunch & L...UCICove
About UCI Applied Innovation:
UCI Applied Innovation is a dynamic, innovative central platform for the UCI campus, entrepreneurs, inventors, the business community and investors to collaborate and move UCI research from lab to market.
About the Cove @ UCI:
To accelerate collaboration by better connecting innovation partners in Orange County, UCI Applied Innovation created the Cove, a physical, state-of-the-art hub for entrepreneurs to gather and navigate the resources available both on and off campus. The Cove is headquarters for UCI Applied Innovation, as well as houses several ecosystem partners including incubators, accelerators, angel investors, venture capitalists, mentors and legal experts.
Follow us on social media:
Facebook: @UCICove
Twitter: @UCICove
Instagram: @UCICove
LinkedIn: @UCIAppliedInnovation
For more information:
cove@uci.edu
http://innovation.uci.edu/
Nurture Talent Academy conducted InvestorYatra for startups in Delhi, Gurgaon and Noida in July 2013. 25 entrepreneurs visited investors offices like TLabs, GSF Accelerator, SAIF Partners and Canaan Partners to learn all about incubators, accelerators, angel investors and venture capital. Every session had an investor share insights on a startup topic - this presentation contains specifics about term sheet and agreements shared by Nishant Verman of Canaan Partners. Check out more on www.investoryatra.com.
This presentation was given to a group of Founders, CEO's and praticipants in the Financing of their growth companies at the Digital Media Zone at Ryerson University in Toronto today.
Intro to Corporate Venture Capital – Terms and Strategic Considerations | Mic...UCICove
About UCI Applied Innovation:
UCI Applied Innovation is a dynamic, innovative central platform for the UCI campus, entrepreneurs, inventors, the business community and investors to collaborate and move UCI research from lab to market.
About the Cove @ UCI:
To accelerate collaboration by better connecting innovation partners in Orange County, UCI Applied Innovation created the Cove, a physical, state-of-the-art hub for entrepreneurs to gather and navigate the resources available both on and off campus. The Cove is headquarters for UCI Applied Innovation, as well as houses several ecosystem partners including incubators, accelerators, angel investors, venture capitalists, mentors and legal experts.
Follow us on social media:
Facebook: @UCICove
Twitter: @UCICove
Instagram: @UCICove
LinkedIn: @UCIAppliedInnovation
For more information:
cove@uci.edu
http://innovation.uci.edu/
Early Stage Venture Financings: Terms, Negotiations, and Closingideatoipo
Getting your first round of financing closed is a critical milestone for every start up.
The speakers will review how to find the right investor, how to negotiate the key terms with a view to future rounds, and how to prepare for the due diligence process to get to a quick closing.
Understanding Terms in Venture Capital Financingsideatoipo
This presentation covers the key terms negotiated between a growth stage company and its investors in financing transactions, including:
1) pre-money valuation and deal pricing
2) dividend rights
3) liquidation preferences and participation
4) conversion rights
5) anti-dilution protection
6) veto rights
7) preemptive rights
8) redemption rights
More here: http://www.thecapitalnetwork.org/
Are you thinking about what you need to fund your company? Where do you start? Funding is not “one size fits all”. Every company has to approach their pathway to funding with a unique approach. Join our fundraising experts for an in-depth discussion of what options you have for funding and how to decide which paths are right for you and your company. We’ll have a specific focus on life science focused companies and technologies and the funding choices available.
Experts:
Jeremy Halpern – Nutter McClennen & Fish
Yumin Choi – HLM Venture Partners
Paul Hartung – Cognoptix, Inc
Are you thinking about what you need to fund your company? Where do you start? Funding is not “one size fits all”. Every company has to approach their pathway to funding with a unique approach. Join our fundraising experts for an in-depth discussion of what options you have for funding and how to decide which paths are right for you and your company. We’ll have a specific focus on life science focused companies and technologies and the funding choices available for them.
Part of the all day Venture Fast Track:
http://www.thecapitalnetwork.org/programs/venture-fast-track/
Angel & Venture Term Sheets and Negotiation with an Investor
As an entrepreneur, understanding the parts of an Angel or Venture Capital term sheet can be a daunting task. The session discusses common practices and pitfalls surrounding the use of term sheets and the current market terms for early-stage angel and venture investments. Some sample term sheets will be reviewed and explained.
Led by a venture capitalist, an entrepreneur, and their attorneys, this program explains the critical common business and legal terms used in these term sheets through a live, mock negotiation.
Experts:
- Justin Borgman – Hadapt
- Yumin Choi – HLM Venture Partners
- Alex Glovsky – Nutter, McClennen & Fish
- Adam Ghander – Nutter, McClennen & Fish
Incorporation Stage Issues and Seed Financings Overview w/ Kristine Di BaccoStanford Venture Studio
Which legal entity is best for your startup company? How should you deal with founder stock and other incorporation issues? How should you structure a seed investment? Kristine Di Bacco, Partner at Fenwick & West, will help you answer these important questions, and others, as you think about the process of incorporating and raising seed financing.
Salma Karina Hayat is Conscious Digital Transformation Leader at Kudos | Empowering SMEs via CRM & Digital Automation | Award-Winning Entrepreneur & Philanthropist | Education & Homelessness Advocate
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Best Crypto Marketing Ideas to Lead Your Project to SuccessIntelisync
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Building a diversified investment portfolio is a fundamental strategy to manage risk and optimize returns. For both novice and experienced investors, diversification offers a pathway to a more stable and resilient financial future. Here’s an in-depth guide on how to create and maintain a well-diversified investment portfolio.
What You're Going to Learn
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When listening about building new Ventures, Marketplaces ideas are something very frequent. On this session we will discuss reasons why you should stay away from it :P , by sharing real stories and misconceptions around them. If you still insist to go for it however, you will at least get an idea of the important and critical strategies to optimize for success like Product, Business Development & Marketing, Operations :)
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1. 1
Term Sheet Negotiations
August 24, 2015
Chris Austin, Partner, Orrick
Liz Wessel, CEO WayUp
Ellie Wheeler, Principal, Greycroft Partners
2. 2
Anatomy of a Term Sheet: Agenda
• Key Points
• Pre-Financing Strategy
• Term Sheet Review
— Allocating Value
— Managing the Company
— Investors Rights
—Miscellaneous Terms
• Questions
3. 3
Anatomy of a Term Sheet: Overview
• Allocating Value
—Valuation
—Capitalization
—Liquidation
—Dividends
• Managing the Company
—Board Composition
—Protective Provisions
—Drag Along Rights
• Investor Rights
—Anti-Dilution Protection
—Right of First Refusal & Co-Sale Right
—Redemption
• Miscellaneous Terms
4. 4
Allocating Value: Valuation
(TS: Page 1)
• Valuation: Science and Art
—Valuation Example: VC Hells Kitchen Ventures and others
are investing $4 million at a $10 million pre-money.
—Higher Valuation is not always best – Look for good fit,
strategic value, understanding of business
• Investment Amount: Usually 20-40%
5. 5
Allocating Value: Capitalization
(TS: Pages 1/2)
Founder Vesting
• Standard Schedule is a 4 year term with a 1 year cliff
• Acceleration – Single and Double Trigger
• Setup prior to VC negotiations and keep terms within
the market range (founder favorable side). You do not
want this to be a point of negotiation with VCs.
• Vesting for a portion of time served usually allowed
Stock Option Pool
• Key issue: What will you need to compensate your
employees between this round and the next? No one
answer – depends on current team
6. 6
Founder and Employee Equity Summary:
• Incentives: Investors and management want to align
incentives to build value
• Control: Founders have the opportunity to obtaining
favorable terms if such terms are established prior to
term sheet negotiations
• Precedent: Be wary of the terms of grants to key
employees and consultants
Allocating Value: Capitalization
(TS: Pages 1/2)
7. 7
Allocating Value: Dividends
(TS: Page 2)
• A key component of Preferred Stock ~ basically, it’s
interest.
• This is not a “coupon” investment. Keep at 8% or less
(8% is standard)
• Try to stay away from cumulative dividends. Current
market standard is “as, if and when declared” (which is
generally never…. So no dividends)
8. 8
Allocating Value: Liquidation Preference
(TS: Page 2)
• At Liquidation/Dissolution, VC gets:
—The right to receive the proceeds first - preference
—Piece of the remaining proceeds – participation – try to NOT
have participating preferred
• Examples:
—Both liquidation multiples and participation will the VC’S
actual return
—$20 million investment for 25% of company, and later $50
million exit
—Participating = $20 mm + 25% of $30 mm = $27.5 MM to VC,
$22.5 to everyone else
—Non-participating = $20 MM to VC and $30 MM to everyone
else
9. 9
Allocating Value: Liquidation Preference
(TS: Page 2)
Liquidation Summary:
• Incentives: Liquidation Preferences will guide incentives
toward liquidity
• Control: Even though the Common stockholders may own
the majority of the company, they may be excluded from
the liquidity proceeds
• Precedent: Subsequent rounds can lead to stacking
preferences
10. 10
Managing the Company: Protective Provisions
(TS: Page 3)
Protective Provisions
• Without the vote of a % of Preferred, Company will not
be able to take actions that affect equity/ownership.
For example:
—Authorize/Issue Preferred Stock
—Grant options beyond a certain limit
—Amend the charter
—Sell the Company
• These are in every deal – look to confirm that set of
restrictions is standard
11. 11
Managing the Company: Board Structure
(TS: Page 3)
Board Composition
• Generally at Series A, VC will ask for 1-2 seats
• VC will ask for special provisions ~ Preferred Director
consent
• At Series A, be sure VC is not board majority
12. 12
Managing the Company: Drag Along Rights
(TS: Page 5)
Drag-Along Rights
• Investors can force Common Stockholders to participate
in a sale of the Company.
• Drag-Along rights are not present in every deal, but
becoming more frequent
• Try to make is so that majority common + majority
preferred required – then it’s used to clean up little
holders
13. 13
Managing the Company: Recommendations
Protective Provisions:
• Question your ability to satisfy business objectives
• Consider class voting
• Keep standard market terms
Board Dynamics:
• Don’t give up Board control in the early rounds
• Consider a nomination process for the independent seat
Drag Along:
• Push for exclusion of this term
• If a Drag Along is included, provide that the drag can only be
induced if the Common Stock holders (first choice) or the
board (second choice) approve the deal.
14. 14
Investor Rights
Further Protection for the VC: Reducing Risk
• Right of First Offer (TS: Page 4)
• Anti-Dilution Protection (TS: Page 2)
• Right of First Refusal & Co-Sale Right (TS: Page 5)
• Redemption (TS: Page 3)
• Registration Rights (TS: Page 4)
15. 15
Investor Rights: Right of First Offer
(TS: Page 4)
• With certain standard exceptions, if the company
issues stock, VC has the right to maintain its pro rata
percentage ownership of the company.
—This measurement should be based on the fully-diluted
values, not the outstanding values
• ROFO is a standard term, but limit who has the right
16. 16
Investor Rights: Antidilution Protection
(TS: Page 2)
• If the Company subsequently issues cheaper stock
(subject to standard exceptions), conversion ratio is
adjusted so that upon conversion to common, they get
more than 1:1
• A few methods (Broad/Narrow/Ratchet); varying levels
of punishment
• Broad-based is overwhelmingly the market trend
17. 17
Investor Rights: Right of First Refusal and Co-Sale
(TS: Page 5)
Right of First Refusal
• Before Founder can sell, he must give Company and
Investors right to buy
Co-Sale Right
• If the Investors and the Company decline to buy, then
the Founder must give Investors a right to participate
in that sale
18. 18
Investor Rights: Right of First Refusal and Co-Sale
(TS: Page 5)
Recommendations
• Right of First Refusal & Co-Sale is completely standard
• Be sure to limit who has the right with a share threshold.
• Be wary of carve-outs for founders---example of why your
attorney should draft the documents
19. 19
Investor Rights: Redemption
(TS: Page 3)
• Force the Company to return the money to investors at
specified time (i.e., in 7 years, VC can ask for money
back)
• Push for exclusion of this term (very bad precedent);
however, if it is included confirm that the terms provide:
—Enough runway (5-10 years)
—Redeeming investors only receive what they paid +
dividends
—Higher approval threshold (other Investors must consent)
20. 20
Investor Rights: Registration Rights
(TS: Page 4)
Registration Rights
• Investors can make the company file for IPO, follow-on
offerings
• Don't spend too much time on this section
21. 21
Term Sheets: Miscellaneous Terms
• Information and Management Rights: Opening the books
• Legal Fees: Investor Counsel fees $25k-35k
• No-Shop (“Exclusivity”): Reasonable term