Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
31 Cards in this Set
- Front
- Back
|
Components of a Term Sheet
|
(1)Offering Terms
(2) The Charter (3) Investor Rights Agreement (4) Other Items |
|
|
Components of Offering terms
|
(a)Closing Date
(b) Investors (c) Amount Raised (d) Price Per Share (e) Premoney Valuation (f) Capitalization |
|
|
Components of a Charter
|
(a) Dividends
(b) Liqudation Preference (c) Voting Rights (d) Protective Provisions (e) Optional Conversion (f) Anti-Dilution Provisions (g) Mandatory Conversion (e) Redemption Rights |
|
|
Term Sheet
|
The summary document describing the key terms of a proposed VC investment; provided by a VC frim to a potential portfolio company
|
|
|
Charter
|
A legal document setting out the main rules of corporate governance; also known as the Certificate of Incorporation
|
|
|
Investor Rights Agreement
|
The portion of the term sheet that lists any special rights of the investors
|
|
|
Fully Diluted Basis
|
Any computation that assumes the conversion of all preferred stock and the exercise of all options
|
|
|
Capitalization Table
|
A table prepated as part of the term sheet that lists the stock ownership of all investors, both before and after the current transaction
|
|
|
Tranches
|
Within VC, a slice of a financing round, with different amounts delivered to the portfolio company at different times
|
|
|
Original Purchase Price
|
The price per share paid in a trasaction
|
|
|
Aggregate Purchase Price
|
The priice paid for all shares of a security
=OPP* # of Shares |
|
|
Post-money Valuation
|
The amount of an investment divided by the proporsed ownership percentage; an analogue to market capitalization for public companies
=Price per share * Fully diluted share count =$ investment (/) proposed ownership percentage |
|
|
Pre-money Valuation
|
The post-money valuation minus the amount of the investment; the market cap of a company before an investment
=postmoney val - $ investment |
|
|
Dividend Preference
|
The restriction that dividends cannot be paid to common stock holders unless they are first paid to preferred stock holders
|
|
|
Accrued Cash Dividends
|
A dividend that adds to the redemption value of preferred stock but is not actually paid until a deemed liquidation event
|
|
|
Payment in Kind (PIK) Dividends
|
Stock Dividends
|
|
|
Antidilution Protection
|
Protect investors' stakes if future investments are done at a lower price per share
|
|
|
Down Round
|
The conversion price for preferred stock in round Y is lower than the conversion price for preferred stock in round X
|
|
|
Qualified Public Offering (QPO)
|
An IPO above a minimum size and above a minimum per share price, as specified in the term sheet
|
|
|
Redemption Rights
|
Give conditions under which investors can demand that the company redeem their initial investment
|
|
|
Demand Registration Rights
|
Allow investors to force the company to register a transaction for their shares
|
|
|
S-3 Registration Rights
|
A type of demand registration right that only takes effect once the company is public
|
|
|
Piggyback Registration Rights
|
Rights that allow preferred stock holders to sell their shares in an already scheduled registrered transaction
|
|
|
Rule 144
|
An SEC rule that provides exceptions that allow the public sale of (otherwise) restricted stock
|
|
|
Rule 144A
|
An SEC rule that allows the private sale of restricted stock to qualified institutional buyers
|
|
|
Vesting
|
In VC transactions, when managerial stock ownership and option claims are typically granted over time
|
|
|
Step Vesting
|
When some set percentages of options become vested on a specific date
|
|
|
Cliff Vesting
|
When all remaning options become vested at the same time
|
|
|
Transfer Restricitions
|
Prevent founders from exiting their own ownership in their company
|
|
|
Tag-along rights
|
Requiring that a party holding shares (A) includes the party with this right (B) in any sales of their (A) shares
|
|
|
Dragalong Rights
|
A right of P/S holders to force other investors to sell their stake in the company provided that the P/S holder has found a buyer for all shares at the same price
|
