Private equity waterfalls are a method of dividing capital gains or investment returns between all participants. The parties who benefit from equity waterfalls are typically limited partners (LPs), who are the investors, and the general partner (GP) or sponsor, who can be property…
The number of startups has been on the rise for the last few years, and with the vast need for seed financing, many are asking, “How do convertible notes work?” Despite the global pandemic, over 800,000 entrepreneurs started businesses in 2020. For many of them, convertible…
Setting up a cap table is one of the first things start-up companies must do as they prepare to raise capital. Because start-up companies are private, investors don’t get the same level of transparency for a business’s financials as with a public company. The…
Restricted stock units (RSUs) have broken the mold as a form of compensation to employees of startups in recent years, so we’re breaking down the definitions and fundamental differences between stock options and restricted stock units to help you decide…
Venture capital (VC) is a type of private equity financing many companies use to scale and grow. It requires investors to take educated risks and make calculations on companies with the potential for high growth. Because of the risk involved,…
With so many moving pieces for founders, maintaining discipline and focus when dealing with your capital structure is critical to the long-term health of the venture. Many entrepreneurs fail to understand the change in dynamics during this critical period. Most…
As of January 1st, 2005, the American Jobs Creation Act was amended to include Section 409A of the Internal Revenue Code (IRC). The regulation refers to rules surrounding non-qualified deferred compensation. This regulation aims to ensure that companies aren’t issuing stock options…
We have all heard that COVID has created a ‘new normal’ over and over. And while it can be exhausting, there are justifications to the claim. Venture capital backed companies are seeing huge shifts in valuations due to changed financial…
In companies that offer employee stock options, the benefit provides a valuable incentive for retaining employees, especially during times when the company is successful. An employee stock option plan gives your employees an opportunity to purchase discounted shares of your…
While companies focus heavily on the fundamentals of running their business, they also need to have a comprehensive understanding of how to create an employee stock option plan correctly. From creating the plan to managing it, there are many details…
