Happy New Year! Below is a list of my top ten posts in 2012 based on pageviews. You should also check out “Managing Startups: Best Posts of 2012,” a solid compilation by Tom Eisenmann, Professor at the Harvard Business School, of the best startup posts in 2012 (including my posts below addressing convertible notes). Cheers, Scott
All Posts: ‘Angel Issues’
Top Ten Posts in 2012by Scott Edward Walker on January 1st, 2013
Convertible Note Seed Financings: Founders Beware!by Scott Edward Walker on May 15th, 2012
This post is the third part of a three-part primer on convertible note seed financings. Part 1, entitled “Everything You Ever Wanted To Know About Convertible Note Seed Financings (But Were Afraid To Ask),” addressed the basics. Part 2, entitled “Convertible Note Seed Financings: Econ 101 for Founders,” addressed the economics. This part will address certain tricky issues.
[This post was originally published on TechCrunch.]
Fundraising 101: Checklist for Entrepreneursby Scott Edward Walker on May 9th, 2012
I’ve been a corporate lawyer for 18+ years, and there are certain fundamental mistakes that I’ve seen entrepreneurs repeatedly make in connection with fundraising. Accordingly, I thought it would be helpful to provide a simple checklist tailored to first-time entrepreneurs. I’ve also included links to prior posts for a detailed discussion.
Convertible Note Seed Financings: Econ 101 for Foundersby Scott Edward Walker on April 22nd, 2012
This post is the second part of a three-part primer on convertible note seed financings. Part 1, entitled “Everything You Ever Wanted To Know About Convertible Note Seed Financings (But Were Afraid To Ask),” addressed certain basic questions, such as (i) what is a convertible note? (ii) why are convertible notes issued instead of shares of common or preferred stock? and (iii) what are the advantages of issuing convertible notes?
This part 2 will address the economics of a convertible note seed financing and the three key economic terms: (i) the conversion discount, (ii) the conversion valuation cap and (iii) the interest rate.
Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? and (ii) what happens if the maturity date is reached prior to the note’s conversion to equity?
[Note: This post was originally published on TechCrunch.]
Everything You Ever Wanted to Know About Convertible Note Seed Financings (But Were Afraid To Ask) – Part 1by Scott Edward Walker on April 9th, 2012
We are in the golden age of seed financing. Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook.
As a result, the pendulum has swung dramatically in the founders’ favor, and the issuance of convertible notes for seed financing has never been more prolific. Indeed, as a corporate lawyer for 18+ years, I have seen this development first-hand.
Should I Use My Investor’s Lawyer?by Scott Edward Walker on August 31st, 2011
This post was originally part of the “Ask the Attorney” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998 (San Francisco) or 310-288-6667 (Los Angeles). Thanks, Scott
We’re a startup based in Palo Alto, and we just received a Series A term sheet for a $725,000 investment. The investor is kind of insisting that we use his lawyer at a big Valley firm to represent us. He said that he doesn’t need a lawyer, and this will save us a lot of money. We’re first time entrepreneurs, and we don’t know if this is standard practice and what we should do. Any advice would be appreciated.
How Do I Raise Seed Capital If I Don’t Know Any Investors? (Part 3) – AngelListby Scott Edward Walker on November 10th, 2010
This post is part 3 of my three-part series: “How do I raise seed capital if I don’t know any investors?” In part 1, I discussed the importance of hustling and building relationships in order to get warm introductions to investors. In part 2, I discussed some of the different mentorship and seed capital programs, including Y Combinator and TechStars. In this post, I will discuss applying directly to a relatively new site called “AngelList.”
“Ask the Business Attorney” – Will the New Financial Reform Bill Destroy Angel Investing?by Scott Edward Walker on July 21st, 2010
This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat. Below is a longer, more comprehensive version. Please shoot me any questions you may have in the comments section – or feel free to call me directly at 415-979-9998. Many thanks, Scott
ODE TO OAF: A Personal Tribute to Jason Calacanis, Tyler Crowley & the Angelsby Scott Edward Walker on May 19th, 2010
In the spirit of entrepreneurship (and fun), I wrote the following poem about my experience at last night’s Open Angel Forum. (more…)
Webinar for Entrepreneurs: Venture Capital Term Sheets (Plus More)by Scott Edward Walker on April 15th, 2010
My colleague, Susan Morgan, conducted a webinar yesterday with respect to venture capital term sheets for the “CFO University,” which is group of Chief Financial Officers convening monthly webinars via CFOwise. As I have previously discussed, Susan recently joined our team and has strong financing experience, including 7+ years at Fenwick & West in Silicon Valley where she closed more than 30 financings. (You can learn more about Susan’s background on her bio page.) In conjunction with the webinar, Susan also wrote a brief post on convertible notes. You can see the webinar and read the post below. Many thanks, Scott
A Personal Letter to Senator Dodd Regarding His Anti-Angel Investment Billby Scott Edward Walker on March 31st, 2010
Below is a copy of the letter I just emailed to Senator Dodd’s office with respect to his new financial regulatory reform bill and its material adverse effect on angel investments.
Introducing Susan Morgan and Kudos to Ted Wang re the Series Seed Documentsby Scott Edward Walker on March 23rd, 2010
I am pleased to welcome officially Susan Morgan to our team. Susan has 10+ years of sophisticated corporate law experience, including 7+ years at Fenwick & West in Silicon Valley where she closed more than 30 private financings; she is an Adjunct Professor at Golden Gate University, where she teaches a course on Business and Legal Issues in High Technology Startups; and she is a highly successful entrepreneur, having co-founded two software companies. (You can learn more about Susan’s background on her bio page.)
“Ask the Attorney” – Types of Angel Financingby Scott Edward Walker on February 17th, 2010
This post is part of a weekly series called “Ask the Attorney,” which I am writing for VentureBeat (one of the most popular websites for entrepreneurs). As the VentureBeat Editor notes on the site: “Ask the Attorney is a new VentureBeat feature allowing start-up owners to get answers to their legal questions.”
I have two goals here: (i) to encourage entrepreneurs to ask law-related questions regardless of how basic they may be; and (ii) to provide helpful responses in plain English (as opposed to legalese). Cheers, Scott
Angel Financings: Five Tips for Entrepreneurs – Part 2by Scott Edward Walker on December 16th, 2009
This is part two of my two-part series on angel financings. In part one, I provided the following five tips for entrepreneurs: (i) push for the issuance of convertible notes; (ii) understand the key business terms; (iii) diligence the angel(s); (iv) never subject yourself to personal liability; and (v) comply with applicable securities laws. Below are five additional tips for entrepreneurs to help them through the angel financing process. Obviously, this is still a difficult environment in which to raise capital; however, I am confident that 2010 will bring greener pastures.
Angel Financings: Legal Tips For Entrepreneurs – Part 1by Scott Edward Walker on December 2nd, 2009
I am currently working with several smart, young entrepreneurs who are trying to raise capital from “angels” (i.e., wealthy individuals who invest in startups). Indeed, since I moved to Los Angeles from New York City in 2005, I have been involved in a number of angel financings; and what’s interesting from my perspective as a corporate attorney is that the deals run the gamut from an angel handing a check to an entrepreneur and instructing him to “send the paperwork when it’s ready” — to an angel retaining a large, aggressive law firm and insisting on shares of preferred stock, with all the “bells and whistles.” Below are five tips for entrepreneurs to help them through the angel financing process. (This is part one of a two-part series; I will provide five additional tips in my next post.) (more…)
Five Common Mistakes Entrepreneurs Make In Raising Capitalby Scott Edward Walker on September 21st, 2009
This post discusses the five most common mistakes entrepreneurs make in raising capital: (i) playing securities lawyer; (ii) selling securities to non-“accredited investors”; (iii) advertising or soliciting investors; (iv) using an unregistered finder to sell securities; and (v) selling preferred stock to angel investors. The abridged video version is directly below.