Archive for the ‘Raising Capital’ Category

AlphaTakes – Convertible Debt Financing Term Sheets

Convertible debt financings are a common type of bridge financing for emerging technology companies.  In this AlphaTakes video, Matt Storms discusses term sheets for convertible debt financings for an emerging technology company.  He provides a summary of the common key financial and procedural terms that are typically negotiated.

Here are the key takeaways from this video:

    (1)  The convertible debt term sheet for an emerging technology company should be relatively simple and short

    (2)  The key financial term in a convertible debt transaction is typically the size of the discount off the next round’s price or the warrant coverage amount

    (3)  The key procedural terms in a convertible debt transaction typically include the definition of a “Qualified Financing” and the ability to change the transaction documents with less than unanimous approval of the noteholders

 

 

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AlphaTakes – Liquidation Preferences

In this AlphaTakes video, Matt Storms discusses the basics concerning liquidation preferences. He provides a summary of the different types of liquidation preferences that are typically negotiated in emerging technology company transactions. He also provides a spreadsheet illustration of the effects of the different types of liquidation preferences.

Here are the key takeaways from this video:

    (1) A liquidation preference is a right to all or a portion of the assets of a company upon its sale over the rights of others

    (2) The three most common types of liquidation preferences for an emerging technology company are

    (a) non-participating preferred (most common in early stage deals)

    (b) participating preferred

    (c) participating preferred with a cap

    (3) Liquidation preferences are important

 


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Announcing AlphaTakes—Videos for Emerging Technology Companies

We are excited to announce that in coming weeks, we are starting a new video series called AlphaTakes. The goal of the initiative is to provide clients and others with background on the variety of recurring issues that emerging companies face through their development, from startup to sale.  Our hope is that the videos will supplement the existing articles for emerging technology companies that is already contained on our website.

Technology Company Startups

For startups, we plan to cover topics such as the incorporation process, allocating founder shares, common mistakes of startups, and calculating the stock option pool.  We have a number of other ideas as well, based on the questions we receive from entrepreneurs.

Scaling Technology Companies

For operating companies that are scaling, we plan to have videos that go over the different types of financing structures, common mistakes of software companies, the Series A Financing term sheet, liquidation preferences, and anti-dilution provisions.  As bringing on employee talent and contracting are important for scaling companies, we also plan to touch on issues related to employees and contracts.

Emerging Companies Considering Sale

For companies considering a potential sale, we plan to cover common sale transaction structures, how to prepare for a potential company sale, letters of intent, and use of investment bankers.  We also will look at some of the commonly negotiated terms in sale transactions as well as recurring issues that arise during the sale process.

If you have any suggestions on potential topics for us to cover in AlphaTakes, let us know!

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94labs 2011 Summer Class Launch Event

94labs incubator (formerly Spreenkler incubator) recently showcased the fourteen companies graduating from its summer session. The event was hosted at the Wisconsin Institutes for Discovery and featured the founders of the fourteen companies as well as the five companies emerging from the second-stage accelerator class. Joe Kirgues, Greg Meier, Steve Glynn, Emmanuel Mamalakis and others from 94labs led the event.

In introducing the 94labs incubator to the more than 300 attendees, co-founder Joe Kirgues explained the four main goals for companies going through the incubator: (1) develop a scalable business model, (2) build a software prototype, (3) identify and talk with potential customers, and (4) create an investor presentation. Read the rest of this entry »

by Macy Stoneback | Permalink | No Comments

 

Capital Saving and Raising at the Brink

The Capital Saving and Raising at the Brink event held Monday, August 22, 2011 as part of the Forward Technology Festival was a success!  Entrepreneurs, investors, government representatives, and others interacted and shared ideas in a collaborative forum.  We put together a resource page for the event: http://alphatechcounsel.com/capital-saving-raising-2011.html

Capital Saving

In the Capital Saving segment led by Troy Vosseller, attendees were divided into six teams, and each team collaborated to identify the ways in which they have saved capital in their businesses.  Teams simultaneously entered their ideas in different tabs of a GoogleDocs workbook.  Team captains pitched their team’s top two ideas, and attendees voted electronically on the top two ideas.  The winning ideas were: Read the rest of this entry »

by Macy Stoneback | Permalink | No Comments

 

Spreenkler Seed Incubator Launch Night

Last night I attended the Spreenkler Launch Night in Milwaukee. What a great event! It marked the culmination of months of hard work by the inaugural class of the Spreenkler seed incubator by showcasing the graduating class of founders. More importantly, it marked the initial concerted effort in the area to use a systematic approach to create, refine, and commercialize multiple software/Internet-based products and services. And probably even more importantly, as evidenced by the event last night, the incubator brought together a community of like-minded people from all parts of the region and ends of the political spectrum who are motivated to work together to create exciting new technology companies in our area.

Here’s some information about the new companies: Read the rest of this entry »

by Matt Storms | Permalink | No Comments

 

Finders under Fire

Small businesses often have challenges with raising capital from investors.  Gaining access to equity capital can be difficult and complying with a myriad of rules and regulations when seeking help in raising funds can be very confusing.  When raising equity capital, many entrepreneurs seek assistance from unlicensed “finders” for introductions to potential investors. Recent government enforcement actions and commentary from regulatory agencies, however, emphasize some of the risks associated with working with unlicensed finders.

So . . . What do Finders Find?

Generally, finders make introductions between investors and companies, but do not actually sell securities or close transactions on behalf of the companies selling the securities.  If a finder is providing anything more than a simple introduction or access to contact information, or is receiving a fee based on the completion of a transaction, then the finder needs to be licensed as a broker-dealer. Read the rest of this entry »

by Matt Storms and Paul Page | Permalink | No Comments