Author Archive

What are demand and piggyback registration rights in a venture capital investment?

By AskVenture.com

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 [...]

Read More >>

Should venture capitalists or private equity firms actively indulge in social media?

By AskVenture.com

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

By AskVenture.com

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 [...]

Read More >>

Download pre post ipo global offering stats shareholding cap table spreadsheet template sample xls

By AskVenture.com

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, [...]

Read More >>

Exercise price of share option under a share option scheme of a Hong Kong listed company

By AskVenture.com

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, [...]

Read More >>

Venture capital exits – trade sale vs IPO – compared and analyzed

By AskVenture.com

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 [...]

Read More >>

What is vesting period of an employee stock option plan (ESOP)?

By AskVenture.com

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 [...]

Read More >>

Participating vs non-participating preferred stock in liquidation preference

By AskVenture.com

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 [...]

Read More >>

Download Sample Share Cap Table Template of a Venture Capital Term Sheet

By AskVenture.com

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 [...]

Read More >>

What is a venture capital term sheet? Is a Series A term sheet binding?

By AskVenture.com

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 [...]

Read More >>