AlphaTakes – Incorporation Process for an Emerging Technology Company

Understanding the incorporation process is important for emerging company founders. In this AlphaTakes video, Macy Stoneback describes the incorporation process for a typical emerging technology company. She explains some reasons why it is important to properly complete the incorporation formalities:

  • Help ensure limited liability protection
  • Avoid delays and expense at the time of financing or sale in fixing matters that were not properly addressed at the time of incorporation
  • Set founder expectations

 

 

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

 

 

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

 


Board and Shareholder Approvals 101 for Emerging Technology Companies

Now that you’ve incorporated your emerging company, you may be wondering, “How often do I need to hold Board and shareholder meetings?” and “What decisions do I need to bring to the Board or the shareholders?”  These are common questions, and the answers differ company by company, to some extent.  This article is written for founders of typical early stage emerging technology companies. Continue reading →

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. 

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: Continue reading →

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. Continue reading →

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. Continue reading →