caozt72's picture
From caozt72 rss RSS  subscribe Subscribe

Term Sheets 2 Common Stock 

 

 
 
Tags:  venture capital  venture capital investing 
Views:  244
Published:  December 09, 2011
 
0
download

Share plick with friends Share
save to favorite
Report Abuse Report Abuse
 
Related Plicks
Risk profiles of venture capital

Risk profiles of venture capital

From: anon-527071
Views: 283 Comments: 0
Risk profiles of venture capital
 
NBG Venture Capital Investing in Technology Ventures:

NBG Venture Capital Investing in Technology Ventures:

From: becky614
Views: 237 Comments: 0

 
Attached Document

Attached Document

From: arew2237
Views: 265 Comments: 2

 
Venture capital business plan

Venture capital business plan

From: mase123
Views: 187 Comments: 0
Strategic business planning. Check it out >> http://www.business-plan.co.za/sample-business-plans.html
 
Venture Capital Funds

Venture Capital Funds

From: mase123
Views: 133 Comments: 0
Find out how you can attract potential Venture Capitalists and business partners. Learn how to write strategic Venture Capital Proposals/ Business Plans and so much more. http://www.business-plan.co.za
 
See all 
 
More from this user
Oracle Application Express enabled to use central User Management (LDAP) (in German)

Oracle Application Express enabled to use central User Management (LDAP) (in German)

From: caozt72
Views: 348
Comments: 0

2010 Ford Flex Pittsfield

2010 Ford Flex Pittsfield

From: caozt72
Views: 547
Comments: 0

Do@ - A location-based to-do list (EECS498 2006)

Do@ - A location-based to-do list (EECS498 2006)

From: caozt72
Views: 426
Comments: 0

Country Profiles (5.2MB, pps)

Country Profiles (5.2MB, pps)

From: caozt72
Views: 1705
Comments: 0

Miami Beach Neighborhoods Slovenian

Miami Beach Neighborhoods Slovenian

From: caozt72
Views: 691
Comments: 0

HEALTHCARE DESIGN FOR AMERICA’S HEROS

HEALTHCARE DESIGN FOR AMERICA’S HEROS

From: caozt72
Views: 312
Comments: 0

See all 
 
 
 URL:          AddThis Social Bookmark Button
Embed Thin Player: (fits in most blogs)
Embed Full Player :
 
 

Name

Email (will NOT be shown to other users)

 

 
 
Comments: (watch)
 
 
Notes:
 
Slide 1: Term Sheets 1
Slide 2: Common Stock (Common Equity)  Common Stock: the least senior claim on a venture’s asset (residual ownership) • Voting rights • Right to legal dividends • Preemptive rights: right for existing owners to buy sufficient shares to preserve their ownership share 2
Slide 3: Preferred Stock (Preferred Equity)  Preferred Stock: equity claim senior to common stock providing preference on dividends and liquidation proceeds • •  Dividends as a percent of par Non-cumulative v. cumulative Participating Preferred Stock: preferred stock with rights to participate in any dividends paid to common stockholders or preferred stock with an investment repayment provision that must be met prior to distribution of returns to common stockholders 3
Slide 4: Preferred Stock (Preferred Equity)  Paid in kind (PIK) Preferred Stock: preferred stock that has the option of paying preferred dividends by issuing more preferred stock  Redemption Feature: preferred stock feature permitting venture to redeem (buy back) preferred security    Convertible Preferred Stock: preferred stock with option to exchange into common stock Conversion ratio vs. conversion price Down (reset) round: venture round priced below most recent previous price 4
Slide 5: Convertible Debt  Convertible debt: debt that converts into common equity • Has bankruptcy rights • Has security interests in venture’s assets senior to preferred shareholders’ interests in venture’s assets 5
Slide 6: Options   Option: right to buy or sell additional shares of stock Call Option: right, not the obligation, to purchase a specified asset at a specified price     Put Option: right, not the obligation, to sell a specified asset at a specified price American-Style Option: an option that can be exercised at any time until expiration European-Style Option: an option that can be exercised only at expiration date Bermuda-Style Option: an option that can be exercised only at a specific set of dates 6
Slide 7: Option Payoffs    Out of the money options: not currently worth exercising At the money options: breakeven current exercise In the money options: profitable current exercise 7
Slide 8: Warrants  Warrants: • call options issued by a company granting the holder the right to buy a common stock at a specific price for a specific period of time • Typically involves new shares 8
Slide 9: SOLICITING INVESTMENTS: Suppliers of Venture Capital – 25-Year Average 9
Slide 10: OBTAINING COMMITMENTS: Arrangements with Fund Investors  Capital Call: when the venture fund calls upon the investors to deliver their investment funds • Common to require subsequent investments consistent with the levels of investors’ initial contributions 10
Slide 11: DUE DILIGENCE AND ACTIVE INVESTING: VC Fund Management  Deal flow: flow of business plans and term sheets involved in the venture capital investing process  Due diligence (in venture investing context): process of ascertaining the viability of a business plan 11
Slide 12: VC Screening Criteria      1. Venture Capital Firm Requirements 2. Characteristics of the Proposal 3. Characteristics of the Entrepreneur/Team 4. Nature of the Proposed Industry 5. Strategy of the Proposed Business 12
Slide 13: VC Screening Criteria 1. Venture Capital Firm Requirements • Cash out potential • Equity share • Familiarity with technology, product, market • Financial provisions for investors • Geographic location • Investor control 13
Slide 14: VC Screening Criteria Venture Capital Firm Requirements (cont’d) • Investor control • Investor group • Rate of return • Size of investment • Stage of development 14
Slide 15: VC Screening Criteria 2. Characteristics of the Proposal • Requirement for additional material • Stage of plan 15
Slide 16: VC Screening Criteria 3. Characteristics of the Entrepreneur/Team • • • • • • • • a. Ability to evaluate risk b. Articulate regarding the venture c. Background/experience d. Capable of sustained effort e. Managerial capabilities f. Management commitment g. References h. Stake in firm 16
Slide 17: VC Screening Criteria 4. Nature of the Proposed Industry • Market attractiveness • Potential size • Technology • Threat resistance 17
Slide 18: VC Screening Criteria 5. Strategy of the Proposed Business • Product differentiation • Proprietary product 18
Slide 19: Screening Outcomes     1. Seek lead investor position 2. Seek a non-lead investor position 3. Refer venture to more appropriate financial market participants 4. SLOR (standard letter of rejection) the venture 19
Slide 20: Structuring a VC Investment  Term Sheet: summary of the investment terms and conditions accompanying an investment  Typical Issues Addressed in a Term Sheet • • • • • • • Valuation Ongoing funding needs Size and staging of financing Preemptive rights on new issues Commitments for future financing rounds and performance conditions Form of security or investment Redemption rights and responsibilities 20
Slide 21: Structuring (cont’d) Typical Issues Addressed in a Term Sheet • Dividend structure (Number of VCs and outsiders) • Additional management • Conversion value protection • Registration rights • Exit conditions and strategy • IPO-dictated events (e.g. conversion) • Co-sale rights (with founders) • Lock-up provisions 21
Slide 22: Structuring (cont’d) Typical Issues Addressed in a Term Sheet • Employment contracts • Incentive options • Founder employment conditions: compensation, benefits, • • duties, firing conditions, repurchase of stock o termination, term of agreement, post-employment activities and competition Founder stock vesting Confidentiality agreements and protection for intellectual property 22

   
Time on Slide Time on Plick
Slides per Visit Slide Views Views by Location