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Raise

This article is an overview of equity crowdfunding and its basic requirements, along with a discussion of some of its benefits and burdens to companies.

Raise

Our new Series Seed Convertible Notes package and updated Series Seed equity documents broaden resources available for entrepreneurs.

Series Seed Equity Financing Package

Document Generator

Series Seed equity financing documents have become one of the “go-to” sets of documents for many early-stage equity financings. Generate your own set of Cooley's version here.

Equity

Glossary Term

In a corporation, “equity” is often used to refer to the corporation’s outstanding stock and stock options.

500 Startups KISS Convertible Debt & Equity Financing Documents

Document Generator

KISS ("Keep It Simple Security") is the latest generation of convertible debt and convertible equity financing forms from 500 Startups. Generate your custom forms now.

Start

Confusion about your ownership structure, or a poorly planned structure, can create unnecessary administrative hassle and legal expense, and in certain situations can ward off investors. Here are some matters to consider as you establish the ownership structure (capitalization) of your company.

Raise

Borrowing money is less dilutive than raising money with your equity, and, with the right relationships and precautions, might be a better option.

Create and Protect

Cooley Protect is a free resource designed by Cooley’s patent counseling & prosecution team.

Cooley GO in Asia offers the same free founder-focused legal resources and document generators that the US and UK ecosystems have come to trust.

Create and Protect

This article unpacks the “E”, “S” and “G” in the context of startup companies.

Create and Protect

An article explains the importance of ESG in startups

Create and Protect

A roadmap for early-stage companies that want to be more intentional about integrating ESG considerations into business operations.

Raise

This article is an overview of what LatAm founders should be aware regarding Flip

This article outlines the five common pitfalls when issuing stock options to service providers in the US

Raise

In conjunction with our Q1 Venture Financing Report, I sat down with Matt Sacks of Lightbank to get his take on the state of venture capital investing.

Start

Many founders come to us with questions about Section 83(b) elections. They have often heard in startup circles that they need to file these, but may not understand when it makes sense to do so or what problem the Section 83(b) election solves.

Raise

In conjunction with our Q3 Venture Financing Report, I sat down with Merritt Hummer of Bain Capital Ventures to get her take on the state of venture capital investing.

Raise

What is the difference between convertible notes and SAFEs? Though they are similar in some respects, SAFEs have some distinctive characteristics that you should be aware of.

Raise

This post provides a high-level answer to this question for an entrepreneur who is not an expert in securities law but is trying to figure out whether to include a friend, relative or other potential investor in an upcoming financing round even though the person is not an “accredited investor"

NVCA Financing Documents

Document Generator

Prepare the core set of documents for a venture financing using forms provided by the National Venture Capital Association.

Raise

In an effort to further advance diversity efforts and increase the representation of underrepresented minority groups on cap tables, Cooley GO’s term sheets include the option for a diversity rider, which requires startups and their investors to seek diverse co-investors in their deals.

Build a Team

Stock options are one of the most common forms of equity compensation that a company can use to incentivize its workforce. When a company issues options to US employees, there are two types it can choose from: incentive stock options (ISOs) and non-qualified stock options (NSOs).

Raise

If you’re negotiating for equity financing, bridge financing, bank financing, venture debt, or a commercial transaction for your startup, you may be asked to issue a warrant as part of the deal. This article explains what a warrant is, and outlines some of the key terms to understand.

Raise

A “down round” is a financing in which a company sells shares of its capital stock at a price per share that is less than the price per share it sold shares for in an earlier financing. Down rounds are frequently viewed much more harshly than flat or up rounds.

Y Combinator “Safe” Financing Documents (Singapore) Generator

Document Generator

Startup accelerator Y Combinator (commonly referred to simply as “YC”) released a set of financing documents (referred to as "Safe", or "Simple Agreement for Future Equity"). They come in a few different flavors, all of which we present here for use by Singapore companies.

Convertible Promissory Note and Term Sheet (Singapore)

Document Generator

Convertible promissory notes are often used to fund early stage startups or to provide a “bridge” to a larger financing round or a sale of the company. This form of convertible promissory note and a form term sheet for a convertible promissory note financing is for use by Singapore companies.

Safe

Glossary Term

A term used by Y Combinator that describes short “open source” documents that have been drafted for use in early-stage private company financing deals.

Raise

While convertible notes in Southeast Asia and India do feature many of the common U.S. terms such as conversion caps and conversion discounts, this article focuses on the additional terms that are sometimes seen in Southeast Asia and India.

Build a Team

After you set up your new company, one of the first legal documents you will be thinking about is an incentive equity plan, sometimes referred to as an “option plan” or an “ESOP”.

Raise

With India’s strong ties with Silicon Valley and its maturing tech and startup ecosystem, outside investments in Indian companies are becoming increasingly common. However, the Indian economic and legal regime has some unique characteristics.

Start

A Delaware public benefit corporation (PBC) is a for-profit corporation intended to produce a public benefit and operate in a responsible and sustainable manner. A PBC must be managed in a way that balances the interests of the company's stockholders, key stakeholders, and a specific public benefit.

Sell

Whether you're ready to IPO or getting ahead of yourself, it never hurts to read up on our 25 considerations in preparing for your IPO.

Start

In 2017, Congress created the Opportunity Zone program to encourage investment in economically distressed parts of the United States. While the Opportunity Zone program is primarily focused on providing tax breaks for investors, emerging companies may be able to capitalize on the program as well.

Raise

In conjunction with our Q3 Venture Financing Report, I sat down with Bruce Booth from Atlas Venture to get his take on the state of venture capital investing.

Start

Very often founders raise the concern about protecting against dilution. Specifically, they are concerned that, as they grow their business and issue stock to investors, employees, and advisors, their shares, and therefore their voting power, will be diluted.

Raise

In conjunction with our Q2 Venture Financing Report, I sat down with Stephen Kraus from Bessemer Venture Partners to get his take on the state of venture capital investing.

Raise

In conjunction with our Q1 Venture Financing Report, I sat down with Matthew Howard from Norwest Venture Partners to get his take on the state of venture capital investing.

Raise

In conjunction with our Q4 Venture Financing Report, I sat down with Michael Ronen from SoftBank Investment Advisers to get his take on the state of venture capital investing.

Start

Choosing a lawyer for your startup is a decision you should consider carefully. If you plan to raise venture capital, investors will expect you to be represented by a reputable legal team. Here are a few considerations in selecting counsel.

PBC Incorporation Package (Delaware)

Document Generator

Download the core set of documents that our Delaware public benefit corporation startup clients generally need in connection with their initial incorporation, including a certificate of incorporation, bylaws, stock purchase documents, and more.

Raise

In conjunction with our Q2 Venture Financing Report, I sat down with Hans Tung managing partner at GGV Capital, to get his take on the current state of venture capital investing.

Index of Cooley GO Docs Document Generators

Document Generator

Click here for an overview of all available document generators.

Series Seed Convertible Note Financing Package

Document Generator

Issuing convertible notes is one of the most popular ways for startups to raise initial seed funding. Generate your own set of Series Seed Convertible Note Package here.

Limited Liability Company [LLC] [LLC]

Glossary Term

A limited liability company (LLC) is a business structure that combines the pass-through taxation of a partnership with the limited liability of a corporation.

Series Financing

Glossary Term

Series financing refers to the rounds of equity venture capital financing that startup companies pursue.

Series FF Stock

Glossary Term

Series FF Stock is a hybrid between Common Stock and Preferred Stock, and sometimes issued to founders at the time of incorporation…

Public Offering

Glossary Term

A public offering is a sale or equity shares or debt shares by an organization to the public in order to raise funds for the company.

KISS

Glossary Term

KISS (“Keep It Simple Security”) is a term initially used by 500 Startups that describes short “open source” documents that have been drafted for use in early-stage private company financing deals.

Offer Letter

Glossary Term

An offer letter is a letter given by a company to an potential employee that provides key terms of the propsective employee’s employment.

Option pool

Glossary Term

An option pool is a number of shares of stock reserved for issuance to service providers of a company pursuant to options and other equity incentives.

Post-Money Valuation

Glossary Term

Post-money valuation is a term used widely in private equity and venture capital financing negotiations, and refers to the valuation of the company following a financing transaction.

Pre-Money Valuation

Glossary Term

Pre-money valuation is a term used widely in private equity and venture capital financing negotiations, and refers to the valuation of the company prior to a financing transaction.

Fully Diluted Shares

Glossary Term

“Fully diluted” shares are the total common shares of a company counting all currently issued and outstanding, plus shares that could be issued through the conversion of convertible preferred stock or through the exercise of outstanding options and warrants.

Net Operating Loss [NOL] [NOL]

Glossary Term

Net operating loss (NOL) is a loss taken in a period where a company’s allowable tax deductions are greater than its taxable income, resulting in a negative taxable income.

Cap Table

Glossary Term

A capitalization table, or cap table, is a list of your company’s equity securities, including stock, options and warrants, that identifies how many shares are outstanding and who owns those securities

Common Stock

Glossary Term

Units of equity ownership in a corporation entitling their holder to a share of the corporation’s success through dividends and/or capital appreciation.

Liquidity Transaction

Glossary Term

A company-sponsored liquidity transaction occurs when a private company buys its employees’ equity in the company. It has become more common in recent years as many startups choose to stay in private hands longer.

Conversion Price Cap

Glossary Term

A conversion price cap is the maximum price per share at which convertible notes or SAFEs convert into capital stock at the time of the financing resulting in the conversion, regardless of the valuation agreed to by the company and the new equity investors.

Convertible Note

Glossary Term

A convertible note is an investment vehicle often used to facilitate investing in a company prior to establishing a valuation. Convertible notes are loans that generally later convert into equity.

Buy-out

Glossary Term

A buy-out is a contractual clause in which the company or other stockholders can buy out the equity of another stock holder.

409A

Glossary Term

Section 409A of the Internal Revenue Code is a complex and often counterintuitive set of tax rules applicable to deferred compensation.

Section 83(b) Election

Glossary Term

A Section 83(b) election is a letter you send to the IRS letting them know you want to be taxed on your unvested equity, such as shares of restricted stock, on the date you acquired the equity rather than on the date the equity vests.

Acceleration

Glossary Term

If certain events occur (specified by contract), stock vesting can be accelerated so that the stockholder actually owns more equity than the normal vesting schedule would dictate.

Raise

In conjunction with our Q1 Venture Financing Report, I sat down with Adam Valkin, managing director at General Catalyst, to get his take on the current state of venture capital investing.

Raise

If venture debt is a better option for you than doing an equity round, here are some key concepts you should understand before executing the term sheet.

Sell

An important step when selling your company is determining the structure of the transaction. You may have heard the terms “merger”, “stock purchase” and “asset sale”. Click here for a quick primer and summary of some of the advantages and disadvantages of each of these transaction types.

Raise

In conjunction with our Q3 Venture Financing Report, I sat down with Brad Feld, co-founder of the Foundry Group, to get his take on the current state of venture capital investing.

Sell

OK, so you have made the decision to explore a sale of your company. What can you do to make the deal go smoothly and put your best foot forward?

Build a Team

Learn about the various ways in which employees of private UK companies can receive share incentives, such as a grant of options or a direct award.

Board and Advisors

Being very clear about exactly who is on your board and when and how each person joined or left your board is important. Learn more about next steps you should consider for departing and new directors.

Sell

Learn about options available to companies when investors have decided not to fund and the company needs to consider winding down.

Sell

There are several considerations that a private company should take into account when deciding whether to engage in, and how to structure, secondary sales of its stock (also referred to as a liquidity round).

Raise

The first rule of successful fundraising from VCs is: Be Prepared. Read these suggestions before you hit the road.

Sell

A serious buyer for your company is likely to present you with heads of terms (also known as a letter of intent, memoranda of understanding or term sheet) covering the basic terms on which it proposes to buy your company.

Start

You’ve taken the plunge and formed your business as a Delaware corporation. What do you need to do next?

Start

Double-trigger acceleration refers to the partial or full acceleration of vesting of someone’s options or stock based on the occurrence of two distinct events. Each event is a “trigger” and if both events occur, that is a “double trigger.”

Sell

In addition to your basic fiduciary duties as a board member, here are some additional considerations to think about when bringing your company to market, picking a buyer and negotiating the terms of sale.

Raise

How do you show convertible debt on your cap table? Can you bring investors in at different times? What happens if you can't repay your investors? Check out the answers to these and several more frequently asked questions about convertible debt and convertible notes.

Start

One question I get asked all the time by a team founding a startup is how to allocate stock among the two or three initial founders. This stock allocation question is particularly difficult to answer at the start.

Start

This article offers a cautionary tale on the legal and business importance of addressing and documenting founders' ownership interests before incorporation.

Raise

Now that you have agreed on a company valuation with your investors, how do you calculate the price per share for your Series A financing? This can be especially tricky when the company has outstanding convertible notes that are converting into shares of preferred stock.

Y Combinator “Safe” Financing Documents Generator

Document Generator

Raise

Startup accelerator and Cooley client Y Combinator (commonly referred to simply as "YC") released a set of financing documents (referred to as SAFE, or Simple Agreement for Future Equity). We are now making them available for you to generate your own customized set for free.

Raise

In an effort to remove some unnecessary friction from early stage financings, a number of organizations have recently provided (on an “open source” basis) various legal forms for use in financings. We think it helps entrepreneurs to have a central location where they can generate these forms.

Build a Team

Hiring high quality employees is one of the keys to your company’s growth. As you hire, you will be wise to have in place clear comprehensive offer letters for all of your employees. For those in the U.S., many offer letters can be as short and simple as two pages.

Sell

Congratulations! You just received an offer to acquire your company. Here are key concepts that you want to understand before making a deal.

Board and Advisors

We often are asked by clients about common terms for stock or option grants for advisors. Advisors are typically business or technical people that lend their time and expertise to a company in exchange for equity.

Start

This article briefly introduces each of the principal business forms, namely corporations, partnerships, LLCs and sole proprietorships.

Raise

While in days of yore it was basically the case that convertible notes had no discernible link to any particular valuation, those days have passed.

Start

Learn the basics about how an "S Corporation" differs from the more common "C Corporation" before you decide to make the IRS election for S corp status.

Start

We often get asked about the difference between the two most common forms of equity grants - stock and options. This article is intended to highlight some of the important differences between them.

Raise

Control is a critical component of every venture capital deal. It can be used to dictate desired outcomes or, through “negative controls,” to block undesired outcomes. Negative controls can give the venture investor the right to unilaterally block a variety of corporate actions.

Sell

Whether you're ready to IPO or getting ahead of yourself, it never hurts to read up on our 25 considerations in preparing for your IPO.

Build a Team

Early-stage companies frequently overlook many fundamental legal needs and issues surrounding the onboarding of service providers. Here are a few considerations for early-stage companies as they engage workers, and tips to avoid pitfalls that could lead to significant liability.

Board and Advisors

While the board of directors delegates to officers of a corporation (such as the president), the authority to manage “day-to-day” matters, material actions require prior board approval.

Build a Team

Regardless of the reason for termination, it is important to carefully assess risk and review key considerations, both when deciding to terminate employment and when implementing the decision.

Board and Advisors

Proper preparation for board meetings and good record keeping practices can protect you and save you money.

Start

Discover the key similarities and differences between C corporation, S corporation and limited liability company (LLC) business entities.

Raise

Many early stage companies use convertible debt for their initial fundraising. This article identifies and explains the basic terms of convertible debt.

Start

Learn the basics about what a corporation is before you decide what entity your business should take.

Raise

Is your story compelling enough to interest venture capital investors? Do you have demonstrable results? Customer traction? Patented intellectual property? Find out what you should be thinking about before you start to look for venture capital.

Raise

When you receive a term sheet from a VC for a full preferred stock financing, the abundance and variety of terms might seem overwhelming. It can be difficult to understand what terms are really important when you don’t have experience living with those terms.

Board and Advisors

Advisor agreements generally include an assignment by the advisor of all intellectual property rights resulting in the course of providing services under the advisor agreement. A prospective advisor may be skittish about signing such an agreement.

Start

Learn what you need to know about stock grants to founders, including vesting, "cliffs", transfers, and what happens on the sale of the company or a founder departure.

Start

Learn what you need to know about stock grants to founders, including vesting, "cliffs", transfers, and what happens on the sale of the company or a founder departure.

Raise

While each refers to early-stage financings, there are important differences between Friends & Family, Seed and Series A financings that you need to know.

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