Chasing Waterfalls

Previously I discussed the importance of a company’s cap table. In addition to the importance of the cap table while the company is a going concern, it is critically important during the exit because it is a key tool in calculating the waterfall. Simply put, the...

Overview of Cap Tables

1. Introduction to Capitalization A company’s “capitalization” is, in one sense of the word, a breakdown of its ownership structure, in terms of equity and convertible debt. A new venture with just one founder, and no other parties involved yet, has the simplest...

General Solicitation of Investors for Your Financing: Rule 506(c) of Regulation D

Previously, we discussed a startup’s most important tool for selling debt or equity securities in compliance with the Securities Act of 1933, as amended: Rule 506(b) of Regulation D. This rule is critically important to startups because it acts as a safe harbor for...