Archive for the ‘Software’ Category

AlphaTakes – Series A Preferred Stock Term Sheet (part two)

In this second of a two part AlphaTakes video series, Matt Storms discusses the second half of the Series A Preferred Stock term sheet for an emerging technology company, using the Series A term sheet published by the National Venture Capital Association.

Here are the key takeaways from this video:

  1. The three most common alternatives to anti-dilution provisions:
    • Weighted average
    • Full ratchet
    • No anti-dilution provisions
  2. Several provisions are not typically heavily negotiated in Series A financings:
    • Pay to play requirements
    • Attorneys’ Fees
    • Registration rights
    • Participation rights
    • Drag-along rights
    • No shop requirements
  3. Keep an eye on the big picture

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AlphaTakes – Series A Preferred Stock Term Sheet (part one)

In this first of a two part AlphaTakes video series, Matt Storms discusses the first half of the Series A Preferred Stock term sheet for an emerging technology company.  He provides a summary of some of the key terms of the Series A term sheet, using National Venture Capital Association (“NVCA”) model document.

Here are the key takeaways from this video:

  1. The NVCA documents are great resources for understanding the Series A financing, but are fairly investor friendly.
  2. Typical preferred stock dividend provisions alternatives include the following:
    • If and when paid to the common stock
    • Accruing and cumulative
    • If and when declared by the board
  3. Most common preferred stock liquidation preferences alternatives include the following:
    • Non-participating preferred
    • Participating preferred
    • Participating preferred with a cap
  4. Preferred stock typically includes special voting rights, such as designating one or more members to the company’s board of directors and veto rights over certain company actions.

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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


The Confusing World of Joint Ownership of Intellectual Property

A confusing topic for many entrepreneurs is joint ownership of intellectual property.  It often comes up in connection with joint development arrangements, subcontracting portions of work, joint ventures, and other collaborative projects involving intellectual property development, whether it be in connection with software, cleantech, medical device, drug development, or other technology-based initiatives. Read the rest of this entry »

by Matt Storms | Permalink | 5 Comments


Who Owns the Rights to Customer Feedback?

Suppose a customer proposes an idea to improve the software or SaaS offering of a company. The company likes the idea so much that it integrates the idea into its next upgrade. The question becomes, who owns the idea that is integrated into the software or SaaS offering?

As a general rule, the person who creates an idea, authored work, invention, or process, owns the related intellectual property.  There are exceptions to the general rule.  But, in the software and SaaS arena involving licensors and licensees, the general rule applies in most circumstances. Read the rest of this entry »

by Matt Storms | 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