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A Business Law Blog for Entrepreneurs, Startups, Venture Capital, and the Private Fund Industry.

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Preferred Stock Archives

Understanding the Common Investment Structures for a Seed or Angel Round

March 15, 2017 by Alexander J. Davie

businessman selling growthI’ve previously written about the steps that startups and emerging companies need to take to prepare for an angel or seed round, one of which is becoming familiar with the popular investment structures that are available. With the variety of funding options out there, it’s easy to feel confused or overwhelmed when deciding how to go about raising funds. In this post, I’ll explain more about the most common investment structures, to help you develop a customized funding strategy that works for your particular business. [Read more…]

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Filed Under: Startups and Venture Capital Tagged With: Angel Round, Common Stock, Convertible Equity, Convertible Note, Preferred Stock, Seed Round

Venture Capital Term Sheet Negotiation — Part 17: Non-Competition and Non-Solicitation Agreements

December 18, 2014 by Casey W. Riggs

This post is the seventeenth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

In the prior sixteen posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions and discussed valuation, cap tables, and the price per share, dividends on preferred stock, liquidation preferences, the conversion rights and features of preferred stock, voting rights and investor protection provisions, anti-dilution provisions, anti-dilution carve-outs and “pay to play” provisions, redemption rights, registration rights,  management and information rights, preemptive rights, drag-along rights, representations and warranties, rights of first refusal and co-sale, and closing conditions and expenses. In this post, we will discuss non-competition and non-solicitation agreements. [Read more…]

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Filed Under: Startups and Venture Capital Tagged With: Non-Competition Agreements, Non-Solicitation Agreements, Preferred Stock, Term Sheet, Venture Capital, Venture Capital Term Sheet

Venture Capital Term Sheet Negotiation — Part 16: Closing Conditions and Expenses

November 17, 2014 by Alexander J. Davie

This post is the sixteenth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

In the prior fifteen posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions and discussed valuation, cap tables, and the price per share, dividends on preferred stock, liquidation preferences, the conversion rights and features of preferred stock, voting rights and investor protection provisions, anti-dilution provisions, anti-dilution carve-outs and “pay to play” provisions, redemption rights, registration rights,  management and information rights, preemptive rights, drag-along rights, representations and warranties, and rights of first refusal and co-sale. In this post, we will discuss closing conditions and expenses. [Read more…]

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Filed Under: Startups and Venture Capital Tagged With: Closing Conditions, Closing Expenses, Preferred Stock, Term Sheet, Venture Capital, Venture Capital Term Sheet

Venture Capital Term Sheet Negotiation — Part 15: Rights of First Refusal and Co-Sale

November 9, 2014 by Casey W. Riggs

This post is the fifteenth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

In the prior fourteen posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions and discussed valuation, cap tables, and the price per share, dividends on preferred stock, liquidation preferences, the conversion rights and features of preferred stock, voting rights and investor protection provisions, anti-dilution provisions, anti-dilution carve-outs and “pay to play” provisions, redemption rights, registration rights,  management and information rights, preemptive rights, drag-along rights, and representations and warranties. In this post, we will discuss rights of first refusal and co-sale. [Read more…]

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Filed Under: Startups and Venture Capital Tagged With: Preferred Stock, Right of Co-Sale, Right of First Refusal, Tag-Along Right, Take-Me Along, Term Sheet, Venture Capital, Venture Capital Term Sheet

Venture Capital Term Sheet Negotiation — Part 14: Representations and Warranties

October 30, 2014 by Alexander J. Davie

This post is the fourteenth in a series giving practical advice to startups with respect to understanding and negotiating a venture capital term sheet.

In the prior thirteen posts, we provided an introduction to negotiation of the term sheet and discussed binding and non-binding provisions and discussed valuation, cap tables, and the price per share, dividends on preferred stock, liquidation preferences, the conversion rights and features of preferred stock, voting rights and investor protection provisions, anti-dilution provisions, anti-dilution carve-outs and “pay to play” provisions, redemption rights, registration rights,  management and information rights, preemptive rights, and drag-along rights. In this post, we will discuss founder representations and warranties. [Read more…]

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Filed Under: Startups and Venture Capital Tagged With: Preferred Stock, Representations, Term Sheet, Venture Capital, Venture Capital Term Sheet, Warranties

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About the editor

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Strictly Business is a business law blog for entrepreneurs, startups, venture capital, and the private fund industry. Its editor is Alexander J. Davie, an attorney at Riggs Davie PLC based in Nashville, Tennessee. His practice focuses on corporate, securities, and business law. He works mainly with technology companies, including startups and emerging companies, and private equity, venture capital, and hedge funds.
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