Mar 122012
 
Getting Ready for Due Diligence

Is your startup ready to take on outside investors?  For many startups, the knee-jerk reaction is often “sure,” but be careful: sophisticated investors will want to take a rather invasive look through your company to make sure that they’re not investing in a dog. Prepare for an uncomfortable inquiry. Before that inquiry happens, it’s well worth the effort to find and fix problems that are going to arise in that Due Diligence review anyway.  Not [...]

Jul 132011
 
Series AA Financing Documents for NC Corporations

The Y Combinator, an incubator in Silicon Valley, publishes a set of documents for use in the first financing round of early-stage companies.  The documents provide a fairly simple and well-understood set of terms for a financing, centering on a “non-participating” liquidation preference — if the company is sold or liquidated, the investors have to choose between getting their money back (or at least as much of it back as is left) or sharing with [...]

Mar 272011
 

Our company needs more money to operate, but we don’t want to put in more of our own money and don’t want to take out a bank loan.  Can’t we just sell more stock? Of course you can.  But, that transaction is a lot more complicated than just accepting a check and printing a stock certificate. Among other things, there are legal requirements for (1) who sales or offers can be made to, (2) what [...]