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31 Cards in this Set
- Front
- Back
Components of a Term Sheet
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(1)Offering Terms
(2) The Charter (3) Investor Rights Agreement (4) Other Items |
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Components of Offering terms
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(a)Closing Date
(b) Investors (c) Amount Raised (d) Price Per Share (e) Premoney Valuation (f) Capitalization |
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Components of a Charter
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(a) Dividends
(b) Liqudation Preference (c) Voting Rights (d) Protective Provisions (e) Optional Conversion (f) Anti-Dilution Provisions (g) Mandatory Conversion (e) Redemption Rights |
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Term Sheet
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The summary document describing the key terms of a proposed VC investment; provided by a VC frim to a potential portfolio company
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Charter
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A legal document setting out the main rules of corporate governance; also known as the Certificate of Incorporation
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Investor Rights Agreement
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The portion of the term sheet that lists any special rights of the investors
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Fully Diluted Basis
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Any computation that assumes the conversion of all preferred stock and the exercise of all options
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Capitalization Table
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A table prepated as part of the term sheet that lists the stock ownership of all investors, both before and after the current transaction
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Tranches
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Within VC, a slice of a financing round, with different amounts delivered to the portfolio company at different times
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Original Purchase Price
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The price per share paid in a trasaction
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Aggregate Purchase Price
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The priice paid for all shares of a security
=OPP* # of Shares |
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Post-money Valuation
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The amount of an investment divided by the proporsed ownership percentage; an analogue to market capitalization for public companies
=Price per share * Fully diluted share count =$ investment (/) proposed ownership percentage |
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Pre-money Valuation
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The post-money valuation minus the amount of the investment; the market cap of a company before an investment
=postmoney val - $ investment |
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Dividend Preference
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The restriction that dividends cannot be paid to common stock holders unless they are first paid to preferred stock holders
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Accrued Cash Dividends
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A dividend that adds to the redemption value of preferred stock but is not actually paid until a deemed liquidation event
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Payment in Kind (PIK) Dividends
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Stock Dividends
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Antidilution Protection
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Protect investors' stakes if future investments are done at a lower price per share
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Down Round
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The conversion price for preferred stock in round Y is lower than the conversion price for preferred stock in round X
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Qualified Public Offering (QPO)
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An IPO above a minimum size and above a minimum per share price, as specified in the term sheet
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Redemption Rights
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Give conditions under which investors can demand that the company redeem their initial investment
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Demand Registration Rights
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Allow investors to force the company to register a transaction for their shares
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S-3 Registration Rights
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A type of demand registration right that only takes effect once the company is public
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Piggyback Registration Rights
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Rights that allow preferred stock holders to sell their shares in an already scheduled registrered transaction
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Rule 144
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An SEC rule that provides exceptions that allow the public sale of (otherwise) restricted stock
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Rule 144A
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An SEC rule that allows the private sale of restricted stock to qualified institutional buyers
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Vesting
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In VC transactions, when managerial stock ownership and option claims are typically granted over time
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Step Vesting
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When some set percentages of options become vested on a specific date
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Cliff Vesting
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When all remaning options become vested at the same time
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Transfer Restricitions
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Prevent founders from exiting their own ownership in their company
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Tag-along rights
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Requiring that a party holding shares (A) includes the party with this right (B) in any sales of their (A) shares
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Dragalong Rights
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A right of P/S holders to force other investors to sell their stake in the company provided that the P/S holder has found a buyer for all shares at the same price
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