Practical advice. Flat rates. Plain language.


by

See what your cap table might look like if you do capped convertible notes, uncapped convertible notes, or a priced equity deal.

In this post we have an embedded excel sheet that founders can use to compare what their cap table might look like down the road if they use a capped convertible note, uncapped convertible note, or a priced equity deal in their seed round….

Read More


by

Today’s blog post will discuss different kinds of startup investor and explore other ways startups find the financial support they need to be successful.

While not all startups have to raise money to scale, most startups will need some investor money to grow. When it’s time to fundraise, there are many potential sources of funding for your startup. Today’s blog post will discuss different kinds of startup investor and explore other ways startups find the financial support they need to be successful.

What is an Angel Investor?

Angel investors are usually individuals, or groups of individuals, who invest their own money into early stage companies. “Seed funding” from angel investors is usually one of the first sources of financing a startup company will pursue (generally after raising initial funds from the founders and their friends and family). This seed funding is generally used to support the…

Read More

Seed funding

by

In this post we discuss a bill in Congress (HALOS Act) that would make it easier for startups to raise funds at pitch events.

Presentations made at startup demo days on college campuses and at accelerator pitch events routinely mention the details of a company’s effort to raise capital through the private sale of securities. This practice, however, raises concerns over whether these presentations amount to a ‘general solicitation’ for a company’s securities under Regulation D of the Securities Act. The definition of a general solicitation could include any advertisement, article, or other communication, including any meeting where the attendees were invited by a general advertisement that present the opportunity to participate in a company’s securities offering. If an early stage company makes a general solicitation, then it may be precluded from using certain valuable exemptions from registering their security offering with the SEC.

Companies…

Read More

Space Needle Halo

by

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…

Read More

Pioneer Square Labs

by

What we’ve been reading this week at InVigor:

Glowforge, a Seattle based startup, opened up sales for 3D laser printers yesterday. They hit $1 million in just 12 hours.

The GeekWire Summit is next week. The conference convenes business leaders, engineers, investors and innovators for conversations about the future of business and technology.

Pragmatic advice from the Health Innovation Summit for aspiring healthcare entrepreneurs.

Copyright law: If a monkey takes a selfie, who owns the copyright?

Sweden has is experimenting with a 6-hour workday, proving working smarter is better than working longer. Could the U.S. ever adopt this kind of system?

4 angel-certified steps to get your startup off the ground without any venture capital

Read More


by

It is common for startups to raise early rounds of financing through convertible debt. Today’s post highlights valuation caps and discounts in convertible notes.

It is common for startups to raise early rounds of financing through convertible debt. Convertible debt, generally called a “convertible note,” typically converts into equity when the company raises another round of financing. In anticipation of the conversion, many investors will negotiate for valuation caps and discounts. In today’s post, I’ve highlighted the basics of valuation caps and discounts in convertible notes.

What is a Valuation Cap?

A valuation cap provides that the convertible note holders will convert their debt into equity at the lower of the valuation cap or the price in the subsequent round of financing. Without a valuation cap, the note holders would generally convert their debt into equity at the same price as the shares issued in the…

Read More

Negotiating valuation cap

by

In this news roundup we look at startups' fundraising, mergers and acquisitions, a commercial lease horror story, ride sharing regulations, and more

Here’s a collection of the most interesting legal and business news we found this week:

Ride Sharing

One of the big issues facing Uber has to do with the fact that auto insurance policies for individual drivers generally don’t cover damages from commercial activity, including ride-sharing through applications like Uber and Lyft. In Colorado, USAA and Farmers are now offering ridesharing insurance. Colorado is a natural testing ground for these new types of policies, as Colorado became one of the first states to explicitly authorize ridesharing services in 2014.

Startups & Funding

The big news of the day is Box’s IPO. After a shaky ride through the IPO process, Box’s IPO appears to be an initial success. It is a home run for its…

Read More


by

This post discusses hedge fund side pocket accounts and the reason they are included in many hedge funds.

This is our fourth post in our series on understanding hedge funds. Today, we will be discussing hedge fund “side pocket accounts.”

Generally, a side pocket is an account that is established by a hedge fund to segregate certain assets or investments from the fund’s general portfolio. Often, side pockets are used to hold less liquid securities such as real estate and private equity investments. Hedge fund formation documents may specifically permit the use of side pockets, which are used by fund managers to isolate investments often until market conditions improve and the assets can be sold at prices that better reflect their intrinsic value.

The side pocket account is simply an entry on the hedge fund’s books that is tracked separate…

Read More

Hedge Fund Side Pocket Accounts

by

In this post we use the recent news about a loophole in GoPro's lockup provision to discuss the importance of an often overlooked portion of the term sheet.

Here’s an example of a commonly overlooked provision in a term sheet coming into play. Recently, news broke that there was a “loophole” in GoPro’s lockup provision, and the company’s shares subsequently tumbled almost 13%.

What is a lockup provision?
A lockup provision is an agreement that the shareholders will not sell their shares for a specified period of time—often 180 days—following a company’s initial public offering. The point of the lockup provision is to keep existing shareholders from flooding the market and depressing prices in the company’s offering. There are two primary types of lockup agreements. The first is an agreement between the investors and the company during a private offering.

A standard industry term sheet has the following lockup provision:

Investors shall…

Read More