Posts Tagged ‘convertible notes’

Founders Beware: Fiduciary Obligations of Officers

by Scott Edward Walker on May 30th, 2013

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Introduction

Many founders do not realize that officers of a corporation have the same fiduciary obligations as directors.  This post briefly explores this issue and its ramifications.

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Top Ten Posts in 2012

by Scott Edward Walker on January 1st, 2013

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

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Walker Twitter Highlights: April 23rd – 29th

by Scott Edward Walker on April 30th, 2012

I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship and startups, M&A and legal issues.  Below are my five most popular tweets (via bit.ly) for the past week and a few blog-related tweets.  If you’d like to see all of my tweets (or an RSS feed of them), you can do so here.  Cheers, Scott

 

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Convertible Note Seed Financings: Econ 101 for Founders

by 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.]

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Everything You Ever Wanted to Know About Convertible Note Seed Financings (But Were Afraid To Ask) – Part 1

by Scott Edward Walker on April 9th, 2012

 

 

 

 

 

 

 

 

Introduction

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.

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Raising Capital? 3 Tips for Entrepreneurs – Part 2

by Scott Edward Walker on September 21st, 2011

I’ve been helping entrepreneurs raise capital as a securities lawyer for 17+ years, and there are certain fundamental mistakes that I’ve seen entrepreneurs repeatedly make.  Accordingly, I thought it would be helpful to share three basic tips for entrepreneurs in connection with raising capital.  This is part two of a three-part series, which was originally published on The Huffington Post.

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Walker Twitter Highlights: September 5th – 11th

by Scott Edward Walker on September 12th, 2011

I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship and startups, M&A and legal issues.  Below are my five most popular tweets (via bit.ly) for the past week and a couple of blog-related tweets.  If you’d like to see all of my tweets (or an RSS feed of them), you can do so here.  Cheers, Scott

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Walker Twitter Highlights: April 18th – 24th

by Scott Edward Walker on April 25th, 2011

I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship and startups, M&A and legal issues.  If you missed this past week’s Twitter updates, below are my five most popular tweets (via bit.ly) and my blog-related tweets.  If you’d like to see all of my tweets (or an RSS feed of them), you can do so here.  Thanks, Scott

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Should We Execute the “Series Seed” Documents with No Negotiations?

by Scott Edward Walker on April 21st, 2011

Introduction

This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs).  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

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Walker Twitter Highlights: April 4th – 17th

by Scott Edward Walker on April 18th, 2011

I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship and startups, M&A and legal issues.  If you missed the past two weeks’ Twitter updates, below are my five most popular tweets (via bit.ly) and my blog-related tweets.  If you’d like to see all of my tweets (or an RSS feed of them), you can do so here.  Thanks, Scott

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Walker Twitter Highlights: October 31st – November 6th

by Scott Edward Walker on November 7th, 2010

I’m using Twitter as a form of micro-blogging to share interesting blog posts, articles and podcasts relating to entrepreneurship & startups, mergers & acquisitions, and business & corporate law issues.

For those of you who missed this week’s Twitter updates, below are my five most popular tweets (via bit.ly) and my blog-related tweets.  If you’d like to see all of my tweets (or an RSS feed of them), you can do so here.  Thanks, Scott

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“Ask the Business Attorney” – What Are the Biggest Legal Mistakes Startups Make Raising Capital?

by Scott Edward Walker on July 7th, 2010

Introduction

This post was originally part of my “Ask the Attorney” series which I am writing for VentureBeat; below is a longer, more comprehensive version.  I know this stuff tends to be very technical (and perhaps boring), but it is nevertheless critical that entrepreneurs have a basic understanding of the securities laws.

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“Ask the Attorney” – Types of Angel Financing

by Scott Edward Walker on February 17th, 2010

Introduction

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).  Please give me your feedback in the comments section.  Many thanks, Scott

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Angel Financings: Five Tips for Entrepreneurs – Part 2

by Scott Edward Walker on December 16th, 2009

Introduction

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.

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Angel Financings: Legal Tips For Entrepreneurs – Part 1

by Scott Edward Walker on December 2nd, 2009

Introduction

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…)