ait startup lecture series: set up your startup - c. tsakona
DESCRIPTION
Christina Tsakona presenting at AIT's Startup Lecture Series - Steps to Success: “Set Up Your Start Up - Investment Term Sheets in Greece/ Europe/ US”. In collaboration with AIT and CoLab@AIT, this event focused on investment term sheets. A team of attorneys analyze the basic legal terms in investment term sheets and convertible notes for startup companies that are about to or wish to raise funds from Greek, European or US investors.TRANSCRIPT
Thurs
07 CO
LA
B
AIT
WHO WE ARE
TODAY
•CONVERTIBLE NOTE
•INVESTMENT TERM SHEET
•VALUATION & LIQUIDATION PREFERENCE
CONVERTIBLE NOTES
• IT IS A LOAN (SORT OF) • NO CURRENT VALUATION• SPEED, SIMPLICITY & COST
AT A GLANCE:
CONVERTIBLE NOTE
CONVERTIBLE NOTE
“A document signed by a borrower promising to repay a loan under agreed-upon terms”
INVESTOR’S OPTION
TAKE HIS MONEY BACK
CONVERT INTO SHARES
BASIC TERMS
DISCOUNT
INTEREST
MATURITY DATE
FINANCING AMOUNT
CONVERSION OPTIONS
CONVERSION OPTIONS
SALE OF THE COMPANY
VOLUNTARY CONVERSION
AUTOMATIC CONVERSION
NEGOTIATIONS
YOU THE INVESTOR FINAL
INTEREST 5% 10% 8%
DISCOUNT 10% 30% 20%
CAP NO YES ?
MATURITY DATE
2 YEARS 1 YEAR ?
SALE 1X 2X 2X
CONVERSION OPTIONS
AUTOMATIC CONVERSION
VOLUNTARY CONVERSION
SALE
QUALIFIED FINANCING
YES NO N/A
PREFERRED STOCK
YES (@discount) NO N/A
COMMON STOCK
NO YES N/A
LIQUIDATION PREFERENCE
N/A N/A YES (2X)
MONEY BACK NO YES & NO YES
CAP – CASE STUDY
WITHOUT CAP WITH CAP
• Investor puts 100K• Investor estimates valuation at
4M• 9 months after Round at
20M valuation• Investor will have to buy his
shares with 20% discount at 20M valuation
• Investor puts 100K• Cap at 4M• Round at 20M• Investor buys his shares
based on the 4M valuation
WITHOUT CAP
FOUNDERS INVESTOR
END OF CONVERTIBLE NOTE
•BANKRUPTCY/CLOSING DOWN THE BUSINESS• COMPANY PAYS BACK AMOUNT WITH INTEREST• IF NO ASSETS INVESTOR GETS NOTHING
•FINANCING ROUND: INVESTOR SHARES
•EXIT: INVESTOR MONEY
WHAT DOCUMENTS YOU ARE SIGNING
CONVERTIBLE NOTE
TERM SHEET
PURCHASE AGREEMENT
THANK YOU
Let’s Connect
[email protected]/in/tsakonaFacebook.com/ctsakonaTwitter.com/ctsakonawww.dimitrioulaw.com