The price per share of the Series A Preferred Stock that the venture capital investor is willing to pay is equal to the pre-money valuation of the company divided by the total number of shares outstanding.Per share price = pre-money valuation / total number of shares outstanding For example, if TechStartup, Inc. has a pre-money […]
Before we start a discussion on the different terms of a venture capital financing, it is important that every startup seeking VC financing understand the basic language of valuation. What does the VC mean when he says that he is ready to make an investment based on a “pre-money valuation of $8 million” or a […]
To set the ground work to begin a series of posts on the numerous different terms in a typical venture capital financing involving the sale of preferred stock, below is a sample term sheet to get us started. Some of the terms may not be necessary or appropriate in a certain financing, but, at least, this […]
A liquidation preference gives the preferred stock the right to get paid before the common stock. It sets forth the order of return to the investors triggered by certain events such as a liquidation, dissolution, merger, acquisition or sale of all, or substantially all, of its assets. The liquidation preference outlines who will get paid […]
Understanding the valuation language: Pre-money vs. Post-money valuation Before we can start any meaningful discussion regarding venture capital for startups, it is very important that every startup understand the language of valuation. What does the VC mean when he says that he is ready to make an investment based on a “pre-money valuation of $8 […]
A series of quick posts and simple answers that shed light on topics that concern the startup community: Corporate Finance, Corporate Formation, Intellectual Property, Licensing Transactions, M&A, Angel Investors, Incorporation, Venture Capital Financing, etc.
A fictional series of posts that will take you through the various life stages of several startups. This is my best attempt at being creative with somewhat bland topics.
A series of posts that cover the issues and components of incorporation, angel and seed investments and venture capital financings.