Infobip Startup Tribe’s Post

Check out the most recent article by Founders Law LLC's Thomas Budnik on Understanding Equity Rounds - it's always important to understand the game you're playing if you want to win! #startups #fundraising #thoughtleadership #equity #equityfunding #preseed #seedfunding #founders #foundersjourney #attorney

Speed is essential when launching a startup, both in building the product and raising venture money (if needed). That's why convertible instruments, like the SAFE, are the top choice for many early-stage companies. They help secure funding quickly by avoiding the slowdown of negotiating the pre-money valuation, and the extra costs like notary fees (especially in Italy). Simple? Yes.  Risk-free? Not quite. A misstep with convertible instruments can lead to issues later on. Why? Check this read from Crunchbase: https://lnkd.in/dfeusgyT ...and this data from Carta: https://lnkd.in/dWJASxEf #startup #venturecapital #vc #convertibles #seed #startups #entrepreneurs

Seed Money Magic: Convertible Notes Vs SAFEs: Part-1 Ever wondered how startups raise capital before they have a formal valuation? Many founders turn to Unpriced rounds - convertible notes & SAFE Notes, a flexible financing tool that bridges the gap between friends & family rounds and priced equity rounds. Here's how convertible notes work: 1. Investors provide capital in exchange for a future equity stake in the company. 2. The conversion price (price per share) is determined at a later date, typically during a next priced equity round. 3. Convertible notes often include a discount rate (additional equity for the investor) and a maturity date (when the note needs to be converted or repaid). Benefits of Convertible Notes for Startups: A. Fast and easy to close: Saves time and legal fees compared to priced rounds. B. Flexibility for investors: Allows them to participate early without a fixed valuation. C. Founder-friendly: Defers the valuation question until the company has more traction. Stay tuned for Part 2, where we'll explore Safe notes, another popular unpriced round option! #startupfunding #convertiblenotes #entrepreneur #venturecapital #angelinvestor #SAFE #YCombinator #YC

How do you convert Ordinary Shares into Deferred Shares? I often get asked to advise on how to redesignate and convert ordinary shares into deferred shares where a founder has either left a startup or believes it is in the company’s best interest to give up some equity where their role has reduced. Here’s a quick guide: 📑Check Authority: Ensure your Articles of Association allow for the share redesignation. 📑Special Resolution: If the Articles do not, pass a special resolution to amend the articles and an ordinary resolution for the redesignation and conversion. 📑Board Resolutions: Pass board resolutions to authorise the company to handle all of the formalities with respect to the redesignation and conversion. 📑Leaver Acknowledgement: Get the leaver to sign an acknowledgement (if applicable). 📑Issue Certificates: Update share certificates for any ordinary shares not being converted to deferred shares. 📑Transfer: Transfer deferred shares back to the company at nil value (not always the case). 📑Notify Companies House: Submit form SH08 (and sometimes SH10). Follow me and stay tuned for a future post on how to actually then cancel deferred shares and clean up your cap table. #Startups #CapTable #Founders #VentureCapital #ShareConversion If you need any specific legal advice on your situation, please reach out.

Thank you to Mountside Ventures for naming IW Capital in their all-you-need-to-know guide about EIS, and the funds entrepreneurs should pitch their start-ups to this year.   The article delves into: 🔍 The advantages of taking EIS funding 📊 The documents & materials you’ll need to raise capital 📋 The benefits of this for investors   IW Capital are proud backers of British businesses, with experience of structuring not only EIS, but other types of creative growth funding for revenue generating and scaling businesses. We focus on partnering with ambitious entrepreneurs looking to grow their companies.   To read the full article: https://lnkd.in/epE47bUT #IWCapital #PrivateEquity #VentureCapital #Entreprenuers #EIS #SMEs #Business #EnterpriseInvestmentScheme"

All-In-One Term Sheet Guide for Startup Founders A term sheet outlines the key terms and conditions for an investment in a startup. As a founder seeking investment, here are 10 important clauses that you should be aware of: 1️⃣ Valuation Pre-money: Company's valuation before investment to determine equity split. Post-money: Company's valuation including the new investment capital. 2️⃣ Equity Common stock: Basic shares with voting rights but low priority in a liquidation. Preferred stock: Enhanced rights like priority in liquidation, anti-dilution protection. 3️⃣ Liquidation Preference Specifies the order in which shareholders get paid if the company is sold or goes bankrupt. Investors usually get paid back before founders/employees. 4️⃣ Vesting Schedule The schedule over which founders/employees earn their equity over time, e.g. 4 years with a 1-year cliff. 5️⃣ Anti-Dilution Protects investors by adjusting their price per share if the company raises money at a lower valuation in the future. 6️⃣ Board Representation Who gets board seats - a mix of investors, founders, and independent directors. 7️⃣ Exit Strategy IPO, acquisition, or merger provisions and the required shareholder approval for each path. 8️⃣ Confidentiality & Exclusivity Can't share details. Startup can't talk to other investors for a set period. 9️⃣ Drag/Tag Rights Drag: Majorities can force minorities to join a company sale. Tag: Minorities can join a sale initiated by majorities. 🔟 Milestones & Tranching Funding tied to startup achieving certain technical, revenue or other milestones. Read more in attached document (Source: Morgan Lewis) 👉 If you find this helpful - please like, comment & share so that it reaches founders. Check out my free newsletter for more insights: https://lnkd.in/dKZQKHg2 . #startup #fundraising #venturecapital #funding #fundraising #founders #founderjourney #entrepreneurship #entrepreneur #founderstories #startuptips #siliconvalley #startups #vc #vcfund #vcfunding #funding #startups #termsheet #founder

PitchBook's VC Dealmaking Indicator gauges the startup-friendliness of the funding landscape by analyzing factors like investor demand, capital supply, and startup valuations. Historically favoring startups since 2010, the indicator has recently shifted, suggesting a less favorable environment for entrepreneurs. #finance #capital #venturecapital #transactions #dealmaking https://lnkd.in/grP5q9J6

What’s the real difference between a SAFE note and a convertible note? This article sheds light on these two popular instruments often used by startups for fundraising. Understanding these mechanisms is crucial for entrepreneurs and investors alike, especially as they each serve different purposes and have distinct implications for equity distribution and investor rights. The author provides a clear breakdown of the key features of both notes, inviting us to consider factors like valuation caps and discount rates. It's fascinating to see how these nuances can impact a company's future and investor relationships. If you're involved in startup financing or simply curious about these instruments, this article is worth your time. Weigh in—do you think one option is more favorable than the other? https://lnkd.in/dPKX2ei4

SAFE vs. Convertible Note: What’s Best for Your Startup? 🚀 If you’re raising early-stage capital, you’ve likely heard of SAFEs (Simple Agreements for Future Equity) and Convertible Notes. Both are popular tools for startups looking to raise funds without immediately issuing equity, but choosing the right one depends on your unique situation. Here’s a quick guide to help you decide: Benefits of a SAFE: ✅ Simplicity: SAFEs are typically easier to negotiate and quicker to execute. If you're looking for a straightforward way to raise funds without complex terms like interest rates or maturity dates, a SAFE is ideal. ✅ Uncertain Valuation: SAFEs are often favored by early-stage startups as they don’t require setting a valuation to raise capital.  ✅ Founder Friendly: Since SAFEs don’t carry debt-like features (e.g., no maturity date or interest), there’s no looming repayment obligation if priced rounds are delayed. Benefits of a Convertible Note: ✅ More Investor-Friendly: Convertible Notes tend to include interest and a maturity date, which gives investors more security. If your investors want more protection and the possibility of repayment if things don’t go as planned, a Convertible Note may be the way to go. ✅ Short-term Financing: If a startup anticipates closing a priced equity round soon, a Convertible Note can serve as a short bridge. The note converts into equity at a discount, giving early investors an upside while minimizing negotiation over valuation. ✅ Exit Scenarios: A convertible note may be more appropriate where certain exit scenarios are anticipated, such as IPO or acquisition. In these situations, having a fixed valuation would be beneficial. If you're navigating a fundraising round and aren’t sure which option suits your situation, feel free to reach out for tailored legal advice! #StartupLaw #ConvertibleNotes #SAFEs #VentureCapital #Entrepreneurship #Fundraising #SmallBusiness #iwillchallenge #iwillleage -- Day 10 of a 30 day LinkedIn challenge (inspired by Pamela Rosario). I’m a business and IP lawyer. Follow along for my helpful insights, musings, and stories.

"An angel investor supports startups that seek growth and a viable business model. Angels often have a history of entrepreneurship and channel their resources into promising ventures. Unlike conventional investors, angels bring more to the table than just capital." Read the entire #BackToBasics blog on the mechanics of angel investing: https://bit.ly/3OdZk9e #AngelInvestor #StartupInvesting #GrowthVentures #BusinessModel