A liquidation preference is exactly what it sounds like, priority treatment for certain stockholders upon the liquidation, sale, merger, IPO or dissolution of a company. It is a typical Series Preferred Stock right in venture financing transactions. As I’ve stated in earlier posts, I believe that liquidation preferences are a top negotiating priority at the term sheet stage (I actually believe that this provision [...]
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The lexicon and jargon of the venture world is a frequent topic of articles and posts. It changes year-to-year, or with each up and down cycle. In the mid to late 90’s the buzzwords were ”eyeballs,” “paradigm shift,” “new economy,” “bricks-and-mortar” and the ever present “synergy.” During the latter half of 2009 up to the present [...]
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You may have read my earlier post entitled Doing it Right the First Time: The 15 Most Common, but Avoidable, Mistakes Made by High Growth Start-ups. I wanted to add some additional articles/posts I’ve read since then that add some flavor to my post. Check out the following:
When to Fire Your Co-Founders, by Simeon Simeonov [...]
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Depending on who you are raising money from, your initial contact with the investor(s) will take different forms. If you are raising friends and family money, then you will most likely use a private placement memo format along with a subscription agreement as your initial contact. This is so because at the friends and family level, you [...]
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I remember the mid to late 90’s well. Everyone was high on the hog and sniffing Internet glue. Kids that couldn’t even shave had a paper net worth in the millions, if not billions in some cases. And some of the most ridiculous deals of the century got funded. The atmosphere was such that everyone believed [...]
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Imagine you are half-way through due diligence on your Series A round and the venture fund’s counsel realizes that you never complied with federal and state securities laws when you raised angel money. Or, imagine your early CTO hire does not have the level of experience he/she professed in the interview or on his/her resume and the company is [...]
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The basic difference between a board of directors and a board of advisors is that the former is a legal requirement and has fiduciary duties to the shareholders of the corporation and the latter is not a requirement and bears no legal responsibility to the shareholders of the corporation. The board of advisors concept was [...]
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On November 10, 2009 I attended the inaugural FashInvest conference in New York entitled “From Concept to Capital.” Karen Griffith-Gryga and David Freschman, the founders of FashInvest, put on a wonderful event and are definitely heading in the right direction to bring venture capitalists, entrepreneurs and branded and fashion company executives together under one roof. The [...]
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The fact that anyone is offering you money is a good thing, at least in times like these. But wipe the smile off your face and realize that you have some tough decisions ahead of you - you need laser focus! Not all money is good money, or smart money for that matter. This issue is not [...]
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I don’t care if your company is bigger than the competition or has what some like to call the “first mover advantage,” beating out the competition is all about differentiation and playing to your strengths. What recently got me thinking about this was an older podcast I was listening to from Stanford University’s Entrepreneurial Thought Leadership program. The [...]
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