Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Term sheets tend to favor the founder over the investor or the other way around. 

Here is how to tell if you have a founder-friendly term sheet:

• Valuation skews to the higher end of the market in favor of the founders.
• There’s no liquidation preference for the investors.
• The option pool shares will be paid for by both founders and investors and not founders alone.
• There are no performance reviews nor non-compete clauses for the founders.
  
• There are no dividends paid to the preferred shareholders.
• The term sheet uses a broad-based weighted average for anti-dilution and includes provisions for the investors to “pay to play”.
• The investors must pay their own legal expenses.
  
• The term sheet does not force arbitration which means the founders and investors can use the courts.
  

Look for these key points in a proposed terms sheet to indicate which party it favors.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
___________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org 

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/ 

For Feedback please contact info@tencapital.group

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Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The cap table tracks the ownership in the company.

In applying the company’s equity to the business there are several mistakes to avoid:

One - Not vesting the equity over time. 

It’s important to set up a vesting schedule for the equity to vest over the duration of the project.

If the employee or contractor departs before the vesting schedule is completed, then the unvested shares return to the company.

Vesting should apply to the founders as well.

It’s not uncommon for investors to unvest founder shares and put them on a vesting schedule to ensure commitment from the founders. 

Two - Not writing down all equity commitments. 

Some startups use equity to pay for things such as website development and more.

This should be documented and placed on the cap table.

Make sure equity is given for specific projects and outcomes.

Three - Not keeping the cap table in one place.

It’s easy to sign a number of notes, agreements, and other documents, but it’s important to compile the results into a single cap table.

Four - Not keeping track of tax laws.

There are several tax implications around granting equity ownership, so it’s important to keep track of them.

The most common is the need for a 409A valuation in which you have a third party value the stock for tax purposes on options.

Watch out for the issues in managing your cap table.


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
___________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org 

Check out our other podcasts here: https://investorconnect.org/ 
For Investors check out: https://tencapital.group/investor-landing/ 
For Startups check out: https://tencapital.group/company-landing/ 
For eGuides check out: https://tencapital.group/education/ 
For upcoming Events, check out https://tencapital.group/events/ 

For Feedback please contact info@tencapital.group  

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In this episode, Hall welcomes David Hornik, Founder and General Partner at Lobby Capital.

Lobby Capital is a venture capital firm headquartered in San Francisco, California. They join forces to collectively fund, advise, support, and mentor the next great innovators. Seven colleagues, confidants and friends have been building, advising, and funding startups for a collective 175 years and counting. Over those years their paths have crossed, at times converging and others diverging. But today they lock arms to bring you Lobby Capital — a venture capital firm that is all about the people.

For the last 25 years, David has worked closely with technology entrepreneurs to help them build transformative businesses. Prior to founding Lobby Capital, David was a partner at August Capital for 20 years. David invests in a broad range of software companies, including enterprise application, infrastructure, and SaaS businesses (e.g, Splunk, Fastly, GitLab), financial technology companies (e.g., Bill.com, WePay, PayNearMe), and consumer services (e.g., Evite, Ebates, TopHatter).

David has an eclectic educational background. He received a BA from Stanford in Computer Music, an M.Phil in Criminology from Cambridge University, and a JD from Harvard Law School. He teaches courses in entrepreneurship and venture capital at Stanford Business School and Harvard Law School and serves as a VC Partner at the Harvard Business School.

David started the first venture capital blog, VentureBlog, and the first venture capital podcast, VentureCast, and is the host of LobbyTV. He has served as the Tech Curator for the TED Conference in Vancouver and was the co-creator and host of TEDxStanford. David has received Deloitte’s Venture Capitalist of the Year award and has been honored by Forbes Magazine as a member of its Midas List of top Venture Capitalists.

David lives in Palo Alto with his wife Pamela, their four children, and their puppy Teddy. David serves on the board of GLAAD, a leading LGBTQ rights organization, and is a member of the board of the Stanford Alumni Association.

David advises investors and entrepreneurs, discusses where he sees the industry going, and shares what excites him in the space.

You can visit Lobby Capital at www.lobby.vc.

David can be contacted via email at hornik@lobby.vc, and via LinkedIn at www.linkedin.com/in/davidhornik. 

Music courtesy of Bensound.