This document discusses various financing options for startups, including equity sources like founders, angels, accelerators, seed funds, and VC funds, as well as debt sources like credit cards, promissory notes, and loans. It provides examples of equity structures like common stock, preferred stock, warrants, and options. It also describes different types of debt structures and their key terms, such as interest rates, repayment schedules, guarantees, and collateral.
1. Law & Order:
Financing Options
for Startups
February 12, 2013
Nicole Moss
(617) 816-8220
nmoss@campbellriggs.com
2. Disclaimer
The information presented herein and the surrounding
discussion are provided for educational or informational
purposes only. The information presented herein is not
necessarily applicable to any particular situation herein or
discussed in the course of this presentation. By providing this
information and engaging in discussion, no legal advice is
provided hereby and no attorney client relationship or privilege
is being established. Every business and every issue is unique
and legal questions or issues should be directed to your
attorney.
16. Org Chart
Shareholder #1 – 50% Liquidity Event: $1000
Shareholder #2 – 30%
Shareholder #3 – 20% Distribution: $1000
Waterfall:
- outstanding debt
Company
- shareholders pro rata
Assets
17. Common Stock
• For cash, in-kind, in lieu of compensation
• = a Security
• Governed by:
• Federal & State Securities Laws
• State Corporate Laws
• Certificate of Formation (public)
• Bylaws
• Other Agreements – Shareholders’,
Investors’ Rights…
18. Preferred Stock
• Like Common PLUS
• Liquidation Preference
• Convertible
• Superior Voting Rights/Protection
• Anti-dilution – ROFR, Participation
19. Preferred #1 – 50% Org Chart
Shareholder #1 – 25% Liquidity Event: $1000
Shareholder #2 – 15%
Distribution: $1000
Shareholder #3 – 10%
Waterfall:
- outstanding debt
Company
- Preferred shareholders
pro rata
- Common shareholders
pro rata
Assets
20. Warrants & Options
• Not an Equity, but still a Security
• Exercise Threshold
• Strike Price
• Warrants -> Transactions
• Options -> Compensation