Category Archives

Startup Financing Is Not A DIY Project

There are projects that are easy enough for a smart startup founder to take on, and then there are projects that are simply too complex, and which require the help of an experienced lawyer. Financings, such as a seed round or convertible note financing, are definitely not DIY projects. Several Read More

New Exemption for Sales of Restricted Stock

President Obama signed legislation this month that creates a new, explicit exemption for private resales of restricted and control securities. The legislation, contained in Fixing America’s Surface Transportation Act (the FAST Act), will make it easier for the holders of restricted stock to cash out their holdings, provided they sell Read More

EQUITY CROWDFUNDING 2.0

On October 30, the SEC took another shot at legalizing equity crowdfunding, by passing final regulations that are much more streamlined and simpler than the original regulations. The new regulations will take effect sometime next spring or summer, at the earliest. Under the new regulations, a company can raise a Read More

The Friends & Family Round

Prior to doing a seed round or a full venture capital financing, startups frequently need to do a “friends and family” round of financing. This money is often essential to carry startups through to the point where an angel investor would be interested, especially in the regions where angels will Read More

SAFE – A New Financing Tool for Startups

If you follow startups, you’ve probably heard of convertible notes and Series A financings, but the newest item is the SAFE – the Simple Agreement for Future Equity. SAFE is a seed-stage financing tool that provides a lower-cost, speedier alternative to convertible debt financings. SAFE was devised by Y-Combinator partner Read More

AN INTRO TO THE “ACCREDITED INVESTOR”

Startups and other companies seeking investment through private securities offerings will quickly have to master the concept of the “accredited investor.” The underlying idea is that accredited investors have either specialized knowledge or a level of wealth that gives them greater protection in making more speculative investments. By selling only Read More

Ten Common Startup Mistakes – Part 2

In this post, I wrote about the first five out of ten common startup mistakes. Now I will continue with the next five common startup mistakes. Number 6 – Ignoring Securities Laws When a startup raises money, it has to comply with the securities laws. The Securities Act of 1933 Read More

Ten Common Startup Mistakes – Part 1

Today seems like a good day to tie together a number of subjects I’ve written about in the past, as a list of the Ten Biggest Legal Mistakes Startups Make. Here are the first five: Number 1 – Choosing the Wrong Form of Entity All too often, I encounter startup Read More

Anatomy of a Term Sheet – Piggyback and S-3 Registration

Welcome back to our Anatomy of a Term Sheet series. We are taking the model Series A term sheet from the NVCA, and analyzing the various terms in depth. Last time we began a discussion of registration rights, and focused on demand registration rights. Today we are going to focus Read More

Anatomy of a Term Sheet – Registration Rights

Welcome back to Anatomy of a Term Sheet, a multi-part series in which we take the model Series A term sheet from the NVCA, and analyzing the various terms in depth.  We have finished with the charter terms and the Stock Purchase Agreement section of the model Term Sheet. Today Read More