Summer 2009 Internships
Posted on 31. May, 2009 by admin in Term Sheets
LearnVC.com, Inc. provides a web-based application for entrepreneurs and investors to model investments into startups. On LearnVC.com we have free educational material with interactive examples for the “levers of valuation” powered by our modeling software. Our full modeling software is currently in an invite-only beta and will be demonstrated to those interested in working with [...]
(Updated) Example Term Sheets and Term Sheet Generator
Posted on 28. Apr, 2009 by admin in Examples
In November last year, I posted about a few great examples of term sheets and related equity financing documents. Since then a few things have happened warranting a new post to summarize everything.
First, there’s the Class F stock documents created by Wilson Sonsini and hosted on TheFunded Founder Institute. This is by far the most [...]
Taking Guy Kawasaki’s advice, Twitter as a Tool/Twool
Posted on 05. Dec, 2008 by admin in Term Sheets
Today I started using Twitter. For those that want to follow LearnVC.com related topics on Twitter: http://twitter.com/JeffreyBoardman
External Links
Guy’s original post
Example Term Sheets and Equity Financing Docs
Posted on 12. Nov, 2008 by admin in Examples
Two great resources that we’ve come across are included in the links below. The first from Y Combinator and Wilson Sonsini Goodrich & Rosati is an open source set of equity financing documents. This set of documents can save startups a lot of time and money.
The second set of documents is from the The [...]
Levers of Valuation
Posted on 28. Oct, 2008 by admin in Levers of Valuation
A common mistake is to only focus on the pre-money valuation when negotiating with investors/entrepreneurs. Initially we will look at 6 "Levers of Valuation" that affect a typical investment in an early stage company. This is not the complete list, but a good introduction to the concept.
Pre-money valuation
Investment amount
Option Pool creation
Liquidation Preference
Dividends
Convertible vs. Participating Preferred [...]
Types of Preferred and Common Stock
Posted on 02. Oct, 2008 by squareroots in Term Sheets
Types of Common Stock:
Founder’s Stock (owned outright from formation, no vesting)
Restricted Stock (same as founder’s, but with vesting)
Option Pool (usually for incentive plans)
Types of Preferred Stock
Convertible Preferred
Participating Preferred
Types of Stock Options
Incentive Stock Options (ISO)
Non-qualified Stock Options (NSO)
NOTE on Preferred Stock
Preferred Stock is different than stock market, as it includes:
Conversion Rights (go from Preferred to Common)
Liquidation [...]
Warrants vs. Stock Options
Posted on 01. Oct, 2008 by squareroots in Term Sheets
While many people are familiar with stock options, fewer are familiar with warrants. Warrants are widely used in the startup world by investors, so it is important for entrepreneurs to understand their nuances.
Let’s start with stock options. Stock options are created from the Option Pool, which was described in an earlier post. Warrants are not [...]
Liquidation Stack
Posted on 12. Sep, 2008 by squareroots in Graphical Examples
Investors refer to “down-side protection” a lot in funding startups. One way investors protect themselves is with Preferred Stock, which is dependent on the Liquidation Stack. The liquidation stack refers to the order in which shareholders are paid proceeds from a sale.
Let’s look at the example shown on the right. First, [...]
Option Pool Creation
Posted on 17. Aug, 2008 by squareroots in Basics, Graphical Examples
One of the more subtle points of valuation is option pool creation. The first method is an option pool created from the pre-money side, but calculated on a post-money basis. The second is an option pool created from the post-money side, and calculated on a post-money basis. This is where a graphical [...]
Convertible vs. Participating Preferred Stock
Posted on 04. Aug, 2008 by squareroots in Graphical Examples
Convertible Preferred Stock will either convert into common or stay as preferred (and take out its liquidation preference and dividend) in a exit event. For Participating Preferred Stock, the liquidation preference and dividends are taken out, and then converts into common. In common, the Participating Preferred Stock takes their ownership amount along with [...]