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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
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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Read More >>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 [...]
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 “Plan” [...]
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 [...]
What is Series A Convertible Preferred Stock Funding and Financing in a Venture Capital Investment?
What is Venture Capital?
Venture capitalists provide venture capital to startup, high growth companies usually with a prospect of achieving an IPO within a number of years (e.g., 3-5 years). Venture capitalists generally invest in the form of funds that are privately held limited partnerships (LP).
What is a Venture Capital Fund?
A venture capital fund is [...]
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 [...]
Anti-monopoly Law – MOFCOM’s decision to block Coca Cola’s proposed US$2.3 billion acquisition of Huiyuan Juice
This article revisits some of the key provisions of China’s Anti-Monopoly Law (反垄断法) and gives a legal review of the decision by the Ministry of Commerce (MOFCOM/商务部) to block Coca Cola Co’s (可口可乐公司) proposed US$2.3 billion acquisition of Huiyuan Juice Group (汇源公司集团).
Anti-Monopoly Law – a brief background
After more than 13 years’ of drafting and debate, [...]
China to Launch Growth Enterprise Board on May 1, 2009
This article gives a legal review of the China Securities Regulatory Commission’s (CSRC) (中国证监会) announcement on March 31, 2009 regarding the launch of China’s growth enterprise board (创业板) on May 1, 2009.
On March 31, 2009, the CSRC issued the “Provisional Regulations on IPO and Listing on the Growth Enterprise Market” 《首次公开发行股票并在创业板上市管理暂行办法》 regarding the launch of [...]
