Practical advice. Flat rates. Plain language.


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A cap table (or capitalization table) is a spreadsheet listing all of your company’s securities (stock, options, etc.) and who owns those securities.

A cap table (or capitalization table) is a spreadsheet listing all of your company’s securities (stock, options, etc.) and who owns those securities. Cap tables provide a basic look into the “total pie” and each shareholder and option holder’s piece of that pie (basically who owns what). More detailed cap tables will include formulas that allow the company to model future transactions. 

There’s no one-size-fits-all way to structure your cap table. Some provide only a general summary of the breakdown of ownership in a company, while others include extensive details about the individual holder, the type of securities held, issue dates, ownership percentages on a fully diluted basis, and other granular details.

When’s the Right Time to Build a Cap Table?

It’s relatively…

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Cap Table Pie

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We continue our hedge fund series by discussing the definition of "accredited investors," and why it is important to your hedge fund.

We are continuing our series on understanding hedge funds; we will be discussing the definition of “accredited investors” and why it is important to your hedge fund.

As a brief primer, you should know that all hedge funds considering a securities offering must comply with federal and state securities laws. The Securities Act of 1933 and 1934 (“Acts”) were put in place to protect investors after the market crashed in 1929, and prior to this point in time, securities were chiefly governed by state law (which still applies in may situations). The two main objectives of the Acts were: 1) to require that investors receive significant (or “material”) information concerning securities being offered for public sale; and 2) to prohibit deceit, misrepresentations, and other fraud in…

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Accredited Investor

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In this blog post we take a look at pending legislation that would create a new statutory securities exemption for the resale of private stock.

The US House of Representatives approved a bill, which if passed by the Senate and signed into law by the President, could make it easier for people to resell private stock. If you’re lucky enough to be an investor in Airbnb, Uber, or some other startup that took off but hasn’t yet gone through an IPO, how do you turn your private stock into cash? It can be tougher than you might think. As a general rule, every offer and sale of a security must be registered or exempt from state and federal securities registration requirements. This includes the resale of private securities, meaning if you have shares of Airbnb or Uber, you have to make sure you’re not violating state or…

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Public Companies Chart

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Pioneer Square Labs is a "startup studio," with its sights set on helping entrepreneurs develop ideas and then validate or crush them.

Startup accelerator? Nope. Startup incubator? Nope. Venture fund? Nope. Pioneer Square Labs is a “startup studio,” with its sights set on helping entrepreneurs develop ideas and then validate or crush them.

Started by several prominent Seattle-based entrepreneurs, investors, and technologists (including co-founders Geoff Entress, Greg Gottesman, Mike Galgon, and Ben Gilbert), Pioneer Square Labs just raised $12.5 million from from 13 venture capital firms and over 50 angel investors. The prominent venture fund Foundry Group led the round, with its managing director, Brad Feld, taking a seat on PSL’s board. The headquarters for its operations are currently on the fifth floor of the Galvanize building in the Pioneer Square neighborhood of Seattle.

Pioneer Square Labs offers Seattle startups and entrepreneurs access to several invaluable resources, including proven…

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Pioneer Square Labs

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Regulation A+ is a new way for companies to raise money from investors. In this post we discuss Reg A+ and compare it to other options for raising capital.

Regulation A+ is a new way for companies to raise money from investors. In this post we discuss Reg A+ and compare it to other options for raising capital….

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Offering Comparison Chart

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News Roundup

August 7th, 2015 News Roundup

Here’s what we’ve been reading this week:

15 Free Online Learning Sites Every Entrepreneur Should Visit  Some very helpful (and free) resources

Legal Advice Startup Raises $71.5M Yay Avvo!

Closing the Gender Gap in Leadership Starts with You

Identify Your Entrepreneurial Personality Type A short and insightful assessment to identify your entrepreneurial strengths and weaknesses

Google’s New Update tells you when places are busiest. Great for the busy summer weekends!

Jon Stewart’s 5 Best Interviews on Entrepreneurship Don’t leave

Flickr I Photo: Zarko

Seattle’s Microsoft Now Offers 12 Weeks of Maternal and Paternal Leave Awesome

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News Roundup

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To streamline the filing of security's notices, the North American Securities Administrators Association, Inc. created the Electronic Filing Depository.

The most common method companies use to raise private capital requires filing notices with each state in which you have an investor. To streamline the process of filing these notices, the North American Securities Administrators Association, Inc. (“NASAA”) created the Electronic Filing Depository (“EFD”).

Who does the EFD help?

The general rule in the United States is that, unless you have an exemption, in order to sell stock in your company, you need to register your stock offering with the SEC. Stock registrations are so expensive and time-intensive that they’re not feasible for most all small companies. As we’ve discussed before, Rule 506 of Regulation D is a “safe harbor” for the private offering exemption of Section 4(a)(2) of the Securities Act….

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Electronic Filing Depository

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To protect against founders taking their equity and running, startups often have a repurchase option to buy back shares from the departing founder.

Most founders are concerned about making sure each of the co-founders are invested in the company. Founders often ask about protecting against a co-founder leaving the company, taking his or her equity, and sharing in the potential future upside value of the startup without continuing to work for that right. To protect against this, startups often have a “repurchase option” to buy back shares from the departing founder.

When Can the Company Exercise the Repurchase Option?

While terms can vary, the shares issued to the founders are often subject to a vesting schedule that requires the founder fulfill certain obligations—e.g. to stay with the company a period of time, achieve certain milestones, or any other creative requirements the founders agree on— in…

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Repurchase Option

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Companies and funds raising capital must file their Form D amendments with the SEC online using the SEC's EDGAR filing system.

When a company decides to raise capital, the company must file Form D giving notice of an exempt offering of securities with the Securities and Exchange Commission. Commission rules require the notice to be filed by companies and funds that have sold securities without registration under the Securities Act of 1933 in an offering based on a claim of exemption under Rule 504, 505 or 506 of Regulation D or Section 4(5) of that statute.

Companies and funds must file their Form D amendments with the SEC online using the SEC’s EDGAR (electronic gathering, analysis and retrieval) system. One question that often arises is this: when is a person or company required to file Form D amendments?

Form D Amendments Filing

A Form D filer should…

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Form D Amendments

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In this blog post we look at when loans may be subject to securities regulations and why business owners should care.

Background

What is a security?
Securities are contracts for an interest in a company, sometimes called an “investment contract.” A typical example of a security transaction is the sale of company stock in exchange for cash. The SEC’s definition of “security” includes a 30-item list that stocks, notes, bonds, and investment contracts, among others. We recently discussed the Howey case, which provides the test courts use when determining whether something is an investment contract. Today’s post looks into the circumstances under which a note or loan would fall within the SEC’s definition of a security.

To start: Why does it matter if something’s a security?
Securities are extensively regulated because of the real risk that individuals and the companies they control could swindle unwitting…

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