Venture Financings

to tell us a story about the problem your product addresses. And give us the steering wheel—we want to play with the demo, not just be passive observers.

the revenue forecast (which we don't need a spreadsheet for—we'd rather just talk about them) and (2) the monthly burn rate or cash consumption of the business. Since your revenue forecast will b

private placement memorandum (PPM)

While the costs are not steep, the $5,000 to $15,000 per year that a typical private company will pay for 409A valuations could easily be spent on something more useful to the company, such as beer or search engine marketing.

However, the IRS gave everyone a way out, also known throughout the legal industry as a safe harbor. If a company used a professional valuation firm, the valuation would be assumed to be correct unless the IRS could prove otherwise, which is not an easy thing to do.

If you are presented with a weak (or one-sided) confidentiality agreement, it could mean that the acquirer is attempting to learn about your company through the due diligence process and may or may not be intent on closing the deal.

If the plan is silent, it's conceivable that when the deal closes and the options are not assumed, they will simply disappear. This sucks for anyone holding options and is probably not in the spirit of the original option plan.

In addition, asset deals are no longer the protection they used to be with regard to successor liability in a transaction, since courts are much more eager to find a company that purchases substantial assets of another company to be a so-called successor in interest with respect to liabilities of the seller.

If someone leaves, that portion of the management retention pool tends to vanish into the same place socks lost in the drier go.

To attract seed stage investors, consider a convertible debt deal with two additional features: a reasonable time horizon on an equity financing and a forced conversion if that horizon isn't met, as well as a floor, not a ceiling, on the conversion valuation.