Equity Investment Simulation. 4 essential ways to attract investors. (Editor’s note: Doug Collom is vice dean and an adjunct lecturer on venture capital and entrepreneurship for Wharton | San Francisco. He submitted this story to VentureBeat.) There really isn’t a one-size-fits-all formula that can be followed for optimizing the chances of attracting professional investment.
Each company is different and faces challenges and issues that can be overcome only through creativity, perseverance and resolve.There are, however, some elements that are so basic they cannot be ignored. Most institutional venture investors either expressly or intuitively address these requirements whenever they evaluate a business plan for a potential investment. Is it a company or is it a product? The mobile application market is a good example of a product category that, in general, doesn’t offer a sufficient foundation to support a company. How big does the market have to be to attract investment? Is prior management-level experience required? Chris dixon's blog / The problem with taking seed money from big VCs. I recently met an entrepreneur who was raising money for his startup. Six months prior, he had raised seed money (<$1M) from one of the increasingly popular seed programs big venture firms are offering (big venture firms = roughly $100M fund and larger).
As a potential investor, the first question I asked him is “is the big venture firm following on?” The answer was no. What this means is the entrepreneur is going to have a *really* tough time raising any more money at all, because what all potential investors think is “if this top VC that has hundreds of millions of dollars and knows this company the best doesn’t want to invest, why would I?” What the entrepreneur didn’t realize is that when you take any money at all from a big VC in a seed round, you are effectively giving them an option on the next round, even though that option isn’t contractual. And, somewhat counterintuitively, the more well respected the VC is, the stronger the negative signal will be when they don’t follow on. Beware the trappings of liquidation preference. (Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
A reader asks:: I’m the co-founder and CEO of an e-commerce startup, and I’ve been meeting with different VC firms regarding an initial round of funding. I’ve started doing some reading on term sheets and the issues we will need to address and I’m a little confused with some of the VC terminology. Could you please explain to me what a liquidation preference is and how we should negotiate it? Answer: Welcome to the world of venture capital. Let’s start with the basics: A VC investor will be issued shares of preferred stock, not common stock. The word “preference” flows from “preferred” and means the shares of the preferred stock will have a priority over (or ‘be treated better than,’ if you prefer) the common stock in the event of a liquidation. VCs and option pools: Now you’re swimming in the deep end. (Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
A reader asks: My co-founder and I have been talking to some VC firms on Sand Hill Road, and I think we’re pretty close to getting at least one term sheet. I read your post a few weeks ago about how one of the common mistakes startups make dealing with VC’s is focusing too much on valuation. You also mentioned there are other important terms that affect the economics of a financing, including the size of the option pool. Can you please explain that? Accordingly, the VC firms will likely require your company to establish a large pool of unallocated options for future employees.
For example, if you and the VC negotiate a pre of $6 million, and the VC has agreed to invest $2 million, then the post-money valuation would be $8 million. The founders, as you see, shoulder all of the dilution. How to Discuss Stock Options with Your Team. I was thumbing through Twitter messages on my Blackberry on Monday (I use Twitter as a “mobile first, web second” product) when I saw the following Tweet (see graphic). I resisted the temptation to jump in with a response because I knew it was too complicated of a topic to discuss on Twitter.
But I thought I should do a quick post on the topic. 1. Options are gravy - I lived through the first dot com era where we used stock options as a recruiting tool. The stupid thing is we sort of believed it ourselves. We obviously attracted the wrong people for the wrong reasons and this led to a lot of disappointment. Options are obviously a very important economic motivator for your first 3-5 employees and your most senior management team. So I developed this standard line that I used for all employees. “Join our company if you think you’ll learn from being here. I’ve said similar hundreds of times. ** Unless you really are Mark Pincus, Mark Zuckerberg, Ev Williams or similar. 2. 3. 4. In terms of vesting, what is a one year cliff. Finally, a Startup Visa That Works. In my last post about the Startup Visa, I was very critical of the Kerry–Lugar legislation.
That’s because it required immigrant entrepreneurs to raise at least $250,000 in financing for their startups, of which $100,000 had to come from American VCs or Super Angels. Few startups raise this kind of seed money—even in Silicon Valley. I couldn’t foresee this bill generating more than a few dozen jobs. Yet our political leaders would have claimed “Mission Accomplished”, and we would have lost a valuable opportunity to stem the brain drain. I was delighted to receive an e-mail, last week, from Garrett Johnson, who works for Senator Richard Lugar (R-Ind.). The new legislation provides visas to the following groups under certain conditions: Entrepreneurs living outside the U.S. The really good news is that this enables foreign students and workers who are already in the U.S. to qualify for a visa.
Editor’s note: Vivek Wadhwa is an entrepreneur turned academic. Startup Stock Options: ISOs vs. NSOs. An Employee’s Guide to Startup Stock Options Even seasoned startup personnel frequently misunderstand the ins and outs of their options. I initially thought I could cram a full overview into one post, but quickly realized that it would take several posts to get into the detail that I wanted. So, this is the first post in the Startup Stock Options series. These posts are intended for employees and other people that own startup stock options. Brad Feld has a great series on Term Sheets which cover stock options (and plenty of other issues) that are more geared for company founders. Over the course of this series, I’ll touch on (in no particular order): How options are grantedVesting schedulesLiquidation eventsBuyback rightsOption prices & how they are setEarly ExerciseMultiple grantsRepricing & Dilution Alternative Minimum Tax Impacts This list isn’t complete and I expect that I’ll add more to it.
The two types of options: Most option agreements will state which type of option you hold. Advice | An Incentive Stock Option Strategy for Startups and High Tech. Until it became common practice in the last decade to offer stock options to a relatively broad spectrum of employees, most people were content to receive stock options at all. Now, more savvy about compensation if bruised by the market downturn, employees more typically wonder whether the options they are offered are competitive with what they should expect from an employer in their industry, for an employee in their position.
As more information has become available about the practices and functions of stock options, employees need solid data on stock options grant practices. Salary.com has researched the trends in high-tech companies during the dot-com boom. In a startup, it's not how many; it's what percentage Particularly in high-tech startup companies, it is more important to know what percentage of the company a stock option grant represents than it is to know how many shares you get.
Rule of thumb: each tier gets half the shares of the tier above it. Table 1. Table 2. Table 3. 10 Tips for Dealing with Startup Stock Options. Stock options can be wondrous things. They can also be smoke and mirrors, or a pea under a whole bunch of walnut shells. So here are some points to keep in mind, whether you’re the founder offering options to your startup employees, or the employee being offered the options.
The classic stock option is an option to buy a share of stock at a specified price. Say you get to buy some number of shares for a penny each. Here’s an interesting tidbit in business history: when Apple Computer went public in 1980, it generated more millionaires (about 300) than any other company in history. And a late addition, a week later: Oh no, I forgot to discuss vesting. For example, options might be vested over two years. Like this article? Loading ... If you're writing a business plan, you're in luck. As you'll see in a moment, LivePlan is more than just business plan software, though.
Click to continue. (4) Startups: How to Communicate Traction... by Brendan Baker. Quelle procédure doit-on suivre pour libérer le reste du capital souscrit ? - Questions d'internautes. Sociétés > Capital de la société. Comment libérer le capital? Les parts de la société peuvent être souscrites en espèces: cela signifie que les futurs associés ou actionnaires se sont engagés à remettre des fonds. Dans ce cas, les parts seront libérées au moyen de versements en espèces. Les fonds qui seront versés au moment de la constitution de la société ou au moment de l'augmentation de capital devront être déposés sur un compte spécial ouvert auprès d'une institution financière qui devra délivrer un document attestant du montant qui a été versé sur ce compte. C'est "l'attestation bancaire", la preuve que les fonds que les fondateurs se sont engagés à apporter à la constitution sont bien à la disposition de la société.
Les parts peuvent aussi être souscrites en nature: dans ce cas, l'apport devra être mis à la disposition de la société dont il deviendra la propriété. Quand faut-il libérer le capital ? Libération totale ou libération partielle du capital Libération minimale du capital * Pour les SPRL: * Pour les SCRL:
Comptes-courants associés - APCE, agence pour la création d'entreprises, création d'entreprise, créer sa société,l'auto-entrepreneur, autoentrepreneur, auto-entrepreneur, auto entrepreneur, lautoentrepreneur, reprendre une entreprise, aides à la création. Le compte courant d'associé est une créance de l'associé ou du dirigeant sur la société, remboursable et rémunérée. Ouvert au nom d'un associé ou du dirigeant dans les livres comptables de l'entreprise, il est inscrit au passif du bilan. Le compte courant d'associé : un prêt produisant des intérêts Lorsque l'entreprise est confrontée à des besoins en financement de sa trésorerie, elle peut faire appel à ses associés pour qu'ils lui prêtent les sommes nécessaires plutôt que procéder à une augmentation de capital dont la procédure est à la fois plus coûteuse et plus longue.Cette avance est inscrite dans les comptes courants d'associés au passif du bilan de l'entreprise.
Elle peut être constituée par : des montants dus par la société et auxquelles ils renoncent temporairement : rémunération, remboursement de frais, règlement de dividendes, etc. des sommes déposées volontairement Dans les deux cas, l'associé dispose d'une créance sur l'entreprise. Régime fiscal des comptes courants d'associés. Seven Attributes Of A Startup Dream Team CFO. Startup Cfo Basics.