Archive for April, 2010
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 [...]
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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 [...]
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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 [...]
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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 [...]
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Download Sample Share Cap Table Template of a Venture Capital Term Sheet
About this cap table This is exactly 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 [...]
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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 [...]
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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 [...]
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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 [...]
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What is Employee Stock Option Plan, ESOP, fully diluted shares?
What is Employee Stock Option Plan (ESOP)? In a typical venture capital investment, the investor and the company will agree to the creation of an option pool before the investor invests in the company. The option pool is also sometimes called an option plan, Employee stock option Plan, or ESOP – usually defined as the [...]
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