Question: Do VC and Private Equity Funds have to invest in C-Corps, or can they invest in S-Corps and LLCs? Our Take: Most often, C-Corps rule the day. S-Corps can only issue one class of stock meaning that VCs and PEs can not get get the benefits of liquidation preferences and other preferred terms. For […]
Question: Have you heard of cases where companies buy back shares from a VC, much like buying back shares from a founder? Our Take: Yes, but the situations usually aren’t pretty. If the company has the cash to buy back shares from the VCs (at their cost or above), then the company is doing well […]
Question: What are the risks associated with funding an Angel round without a PPM? Assume the round is under $250k. Any resources you’d recommend looking at or people to talk this through? Our Take: Few deals these days (at any size) have PPMs written for them. The costs (legal, accounting and management time) just don’t […]
Question: How would you financially incentivize key employees during the startup stage of a company? We’re an LLC so it’s hard to give units (but possible). The alternative is similar to “phantom shares”, but it’s expensive to setup. Our Take: First, I realize that “incentivize” isn’t a word (At least MS Word says it isn’t), […]
Question: I understand that each fund has a time limit (5 to 10 years). What are the dynamics of the funds? Does a fund nearing the end of its term tend to try getting as many exits as possible (at any price)? What happens with portfolio companies after the end of the fund’s term? Is […]
Question: Could you recommend some of the more respected VC and private equity publications (ie., industry-specific magazines, newsletters, journals)? Are there any trade media or trade associations who I should be aware of? I like to be well-informed. Our Take: Let’s divide up into daily emails, paper publications and associations. Daily emails: Dan Primack from […]
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