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To encourage you to invest by the closing date, discounts or warrants are sometimes included to sweeten the deal. “If granted, it is almost always one or the other, but not both,” asserts Dan Rosen, chair of the Seattle Alliance of Angels. [1] “It is, of course, cleaner to just lower the price per share, [...]

Preferred Stocks Are Issued In Series Unlike common stock, preferred shares are issued in series to represent each round of financing. For instance, Series A typically refers to the first round, Series B the second, Series C the third, and so forth. * This is Part 2 of a 3-part series. Visit Part 1 at [...]

Well, you have C Corps, S Corps, and LLCs. Do these differ, and if so, does the form of entity in which you invest even matter? You bet it does. The differences in taxation, the flexibility in ownership, and the capital structuring among these three company structures can be significant.   C Corp., S Corp., [...]

Convertible notes, also known as converts, bridge loans, or convertible debts, are hybrid investment vehicles with debt- and equity-like features. A convertible note is a loan that investors make to a company that can be converted into equity (stocks) upon a triggering event, typically when the company raises its first equity round from professional angels [...]

* This is not legal advice. Consult with your lawyer. In our previous article, you were introduced to Regulation D and Private Placement Memorandum (PPM) and you learned whether a PPM is required in all investment deals. Let’s continue the series with our fictitious company called Yo!Woo, Annice (an accredited investor), and David (a non-accredited [...]

* This is not legal advice. Consult with your lawyer. Antoine Brand asks – What is a private placement memorandum? Should Angel Investors be concerned if the company doesn’t have one? Since many an entrepreneur has asked the same question, why don’t we look at both sides of the table and examine the role it [...]

Sophisticated investors always think about exits before they invest. “Does the company have the potential to go public or become an attractive acquisition target?” If not, they’d take their money elsewhere. Going public or IPO means the company raises money by offering stocks to the general public – you know, those stocks that anyone can [...]

Back in April, we met a patent attorney through Greg George, who suggested we do a post on intellectual property (IP). Law? IP? *yawn* Before you doze off, wait! This patent attorney happened to be McGarry Bair’s (@McGarryBair) Tom Williams (@RealGTom), who’s fun, witty, and enthusiastic – not your typical lawyer. In fact, McGarry Bair [...]

A dear reader, Taliba M., tells us she’s ready to make her second angel investment. She has an eye on a SaaS startup but lacks experience in this area. She wants to know how she should proceed. Read Effective Ways to Invest in the Unknown for our response and the purpose of this series. Taliba [...]

A reader recently asked about dilution and we decided to answer it in 3 parts. Part 1 looks at dilution in an up round; this part examines dilution in a down round; and Part 3 goes over some of the measures you can take to minimize the impact and likelihood of dilution. Here’s the question: [...]