As we noted in our blog post about startup financing options, startups can implement various strategies to stay afloat (and thriving), including: bootstrapping, crowdfunding, traditional loans, convertible financing, and equity financing. Most startups implement the following series of fundraising rounds:…
Choosing the right financing structure is a critical choice for founders. Some begin with their life savings, others run a crowdfunding campaign, and, those eligible, often opt for a traditional loan. Other popular financing options include convertible notes, equity financing,…
Clients often ask, “Can I use a finder when fundraising for my startup?”. A fundraising finder can provide introductions; however, contracting for fees dependent on a successful raise is NOT permitted. It is the hallmark of a broker-dealer relationship (using a registered…
Convertible note financing enables a business to quickly raise capital without negotiating a valuation for the company. In exchange for their investment, investors receive a convertible promissory note that will convert into stock at a future date with a share…
When an entrepreneur decides to raise venture capital funds, it is both a patient process and a sprint to the finish line at the same time. One stage in the cycle is term sheet negotiation. Due to the excitement, and…
Entrepreneurs selling common or preferred stock or issuing options or warrants for stock are issuing securities. That’s why all entrepreneurs and investors should care about securities laws. Even if you are raising a friends and family round, you must comply…
Most entrepreneurs will tell you that it’s okay to fail, and fail hard. That advice is not wrong in the grand scheme of things, but you can quite a bit of pain and expense by avoiding legal failures. Here are…
Prior to an investment or sale transaction, prospective investors or acquirers will complete a comprehensive review of the target business and its records. A company’s ability to quickly and completely respond to due diligence requests increases the likelihood that the…
As more and more startup companies choose to use convertible securities to raise their seed money, there have been several attempts at standardizing the legal documents required to complete these transactions. The most commonly used forms have been published by Y…
In the United States, to be considered an accredited investor, one must have a net worth of at least one million US dollars, excluding the value of one’s primary residence, or have income at least $200,000 each year for the…