Funding Mechanics and Deal Structure Websites & Articles
Venture Capital: An overview of trends, strategies, and structural issues. Note that this is a little dated – see the “Term Sheet for First Round Venture Capital” below for something a little more recent, although less detailed.
“Whether you are an entrepreneur or an angel investor, the topic of convertible note vs. equity impacts you. For the most part, startups favor convertible notes and angels prefer equity, but which one is the right choice for your startup?”
Wondering what your pre-money valuation will be if a VC ever puts a term sheet on the table? Answer the following questions, and we’ll calculate an approximate range for you. Of course, every situation is different, so your mileage may vary.
More nuanced considerations when choosing between convertible debt and priced equity for early stage financing. This article has many links to views from other thinkers in the field.
Templates put together by a group of leading venture capital attorneys. The model venture capital financing documents consist of: Term Sheet Stock Purchase Agreement Certificate Of Incorporation Investor Rights Agreement Voting Agreement Right of First Refusal and Co-Sale Agreement Management Rights Letter Indemnification Agreement Model Legal Opinion
Preferred stock private placement term sheet used by Silicon Valley’s Band of Angels.
Sample (and simple) promissory note sample used by Silicon Valley’s Band of Angels.
This article explains the Funding Mechanics and Deal Structure of pursuing SBIC money. SBIC’s are private venture capital firms licensed by the Small Business Administration.
This article describes, and links to, a model entrepreneur-friendly term sheet. One of the goals is to reduce the amount of time and money that goes into term sheet negotiations. The article briefly describes the rationale for eliminating participation with preferred stock, imposing a 1x liquidation preference, and enacting a single trigger vesting acceleration upon acquisition.
The Silicon Valley law firm of Wilson Sonsini Goodrich & Rosati has developed an online term sheet generator. “This tool will generate a venture financing term sheet based on your responses to an online questionnaire. It also has an informational component, with basic tutorials and annotations on financing terms. This term sheet generator is a modified version of a tool that we use internally, which comprises one part of a suite of document automation tools that we use to generate start-up and venture financing-related documents.”
“Your investors can take their time, they have years to invest their money. Buy you’re under pressure from your employees and co-founders to deliver the money that will keep your company alive. The clock is ticking!
“You probably don’t have a clue what it really costs to raise the capital you need to fund your business. This expert spells it out for you.”
Describes some nuanced but important considerations when choosing to fund via convertible notes vs. priced equity.
“Before you borrow funds with a convertible loan, make sure it’s a positive move for the future of your business.”
“From seed stage to mezzanine, a breakdown of the key financing terms and what Funding Mechanics and Deal Structure mean to you.”
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