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Venture capital exits – trade sale vs IPO – compared and analyzed
Way before a venture capitalist invests in a company, he is already thinking how and when to exit from the investment. This article tells you why and compares between the two venture capital exits – trade sale and IPO.
Illiquid nature and limited life-span of a VC fund
A well-planned exit is particularly important in a VC investment [...]
Download Sample Share Cap Table Template of a Venture Capital Term Sheet
About this cap table
This is excatly the kind of cap table that law firms or venture capitalists would use in a venture capital financing transaction.
It shows you:
1. Capitalization of a company at founding (before preferred stock financing – Series A financing)
2. Capitalization of a company after preferred stock financing – Series A financing
3. Capitalization calculated both on [...]
What is a venture capital term sheet? Is a Series A term sheet binding?
A term sheet is a document that summarizes the key terms of a proposed investment. It is sometimes called a letter of intent.
Typically, a term sheet is not binding, except for confidentiality, exclusivity and expenses (or transaction fees). Exclusivity is sometimes called no-shop no-solicitation clause.
Click here to download your free sample term sheet / letter [...]
Download Sample Venture Capital Term Sheet / Letter of Intent Free
Download your sample venture capital term sheet / letter of intent now.
Please note that this is a term sheet taken from the National Venture Capital Association. It does not constitute legal advice. If you have any doubt as to this term sheet, please consult your legal adviser or professional consultant.
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How to Calculate Liquidation Preference of Preferred Stock in a Venture Capital Financing?
What is liquidation preference?
Liquidation preference refers to preferred shareholders’ rights to receive a certain amount for the preferred shares they hold in preference to common shareholders in the event that a company goes into liquidation.
The scope of liquidation preference varies between different term sheets. Some may be extremely favorable to investors, some may be less. [...]
Calculate pre-money valuation of startup company seeking venture capital funding
Pre-money valuation – the basic concept
The calculation of the pre-money valuation of a startup company seeking venture capital financing is as much a science as an art. It is a science because a lot of the calculations are based on scientific methods – the use of equations, formulas, comparators, etc. It is an art because [...]
Pre-money, Post-money Valuation and Calculation in a Venture Capital Investment
What is pre-money valuation and post-money valuation?
The pre-money valuation of a company refers to the valuation of the company before an investor injects capital into the company. The post-money valuation of a company refers to the valuation of the company after an investor has injected capital into the company. Therefore, the post-money valuation of a [...]
Risky but High Potential Return Nature of Venture Capital Investments
Risky nature of venture capital investments
A crucial aspect of venture capital investment is the ability to identify novel technologies at a very early stage that have a potential of generating huge return within just a number of years’ time. This is because when a venture capitalist invests in a startup company, the company is [...]
From Seed Capital to Angel Investors to Venture Capital Funding – Startup Company Financing Model
This article gives an overview of how a startup company goes from seed capital to angel investors to venture capital funding (Series A round) – the classic startup company financing model.
Seed capital / Seed round / Seed funding
Say, 3 people decide to start a business in biotechnology. They do so by incorporating a company [...]
Popular Articles
What are demand and piggyback registration rights in a venture capital investment?
This article discusses the two types of registration rights that you will find in a typical venture capital financing – demand registration rights and piggyback registration rights.
Why do you need to register your shares?
Skipping all the legal nonsense and jargon, if you want to sell shares of a company on a stock exchange in the [...]
Should venture capitalists or private equity firms actively indulge in social media?
Social media or web 2.0 has become an intergral part nowadays. Being extensively used by in all sectors of industry, the question arises that whether venture capitalists or private equity firms should also invest time on a regular basis in social media. Even if they decide to do so how they should do so i.e. [...]
Read More >>Sample liquidation preference clause in a typical venture capital term sheet
I get asked a lot for a sample clause on liquidation preference used in a typical venture capital term sheet. So, I’ve put together an all-in-one sample clause here for your reference. The good thing about this sample clause is that it covers or can be modified to cover the scenarios of
(1) participating preferred with a [...]
Download pre post ipo global offering stats shareholding cap table spreadsheet template sample xls
This is a spreadsheet used by a major investment bank and law firms showing the IPO offering stats of a company contemplating IPO in a real-live IPO deal (with sensitive and confidential information removed).
It is divided into three parts:
1. Offering stats at IPO (market cap, forecast earning, pe ratio, offer price, IPO proceeds, capitalization issue, [...]
Exercise price of share option under a share option scheme of a Hong Kong listed company
This article sets out the basis of determination of the exercise price of share options to be granted under a share option scheme of a company listed on The Stock Exchange of Hong Kong Limited (Hong Kong Stock Exchange).
Hong Kong Listing Rules
If the shares of a company is listed on the Hong Kong Stock Exchange, [...]
Venture capital exits – trade sale vs IPO – compared and analyzed
Way before a venture capitalist invests in a company, he is already thinking how and when to exit from the investment. This article tells you why and compares between the two venture capital exits – trade sale and IPO.
Illiquid nature and limited life-span of a VC fund
A well-planned exit is particularly important in a VC investment [...]
What is vesting period of an employee stock option plan (ESOP)?
This article discusses what vesting period is in the context of employee stock option plan (ESOP) – something that a company needs to decide when adopting an ESOP or when granting options under an ESOP. I will also set out different examples of vesting periods.
What is vesting period?
Vesting period refers to the minimum period for which [...]
Participating vs non-participating preferred stock in liquidation preference
What is liquidation preference?
Liquidation preference refers to preferred stockholders’ rights to receive a certain amount for the preferred stock they hold in preference to common stockholders in the event that a company goes into liquidation.
What is non-participating preferred stock?
Non-participating preferred stock means in the event of a liqudiation, preferred stockholders will receive a certain amount [...]
Download Sample Share Cap Table Template of a Venture Capital Term Sheet
About this cap table
This is excatly the kind of cap table that law firms or venture capitalists would use in a venture capital financing transaction.
It shows you:
1. Capitalization of a company at founding (before preferred stock financing – Series A financing)
2. Capitalization of a company after preferred stock financing – Series A financing
3. Capitalization calculated both on [...]
What is a venture capital term sheet? Is a Series A term sheet binding?
A term sheet is a document that summarizes the key terms of a proposed investment. It is sometimes called a letter of intent.
Typically, a term sheet is not binding, except for confidentiality, exclusivity and expenses (or transaction fees). Exclusivity is sometimes called no-shop no-solicitation clause.
Click here to download your free sample term sheet / letter [...]
