Angel investors and startups meet in exclusive event

NEW YORK–iBreakfast/iEvening held its first 2016 Startupalooza event last January 27 at Microsoft following its mini-trade show format. It’s how angel investors go around to talk to each entrepreneur at their own pace.

http://www.eventbrite.com/e/pitch-2016-tickets-19873395862

Most of the startups at the meetup were clearly in their very early stages. Vidpal is an online video auctioning platform where people anywhere in the world can request videos while giving anyone an option make money by accepting video assignments.  

Toby Dattolo of Chaptertheapp has come up with an app that encourages people to share their passion with like-minded people in that hope they can ignite positive action together. 

Nothing stands out more than an actual functioning apps, which Shrinktheapp.com demonstrated on its phone. Because each brand runs its own loyalty program, the app offers rewards as one taps into one brand after another to claim in stores.

Another finished product from a young Brazilian-American is what he called “Flipboard for lists” called Listbeam.

 

Other presenters include Tech Trader, which reportedly works as a fully autonomous system capable of trading thousands of stocks simultaneously with no human intervention. Instead of relying on the points of view of an academy, mathematician or scientist, it leverages what the best traders do at scale.  

Another company, USBsports, is looking into providing a platform that houses all the information athletes and coaches need to reach their goals.

For Skin OS, it’s all about how it offers an applicable skin treatment technology for use at home.

CommonSensibly assists people and businesses in using simple common sense processes for their growth.

Vognition has been around for sometime, but if you haven’t heard about it, it offer natural language voice controls for home automation systems.  

Vognition offers a voice control solution that lets users choose any mobile device or smart home controller to give a voice command.

Other exhibitors included Groom Dinkneh for Anchor Your Bike, Helena Merwe of A-Plus Consulting, Trevor Crest of Crest Wealth Planning, Ohad Tov of ISM Wearable Electronics and Syed Shah of 12 Tech LLC, a web development company.  

Orrick’s Mock Series A Term Sheet negotiation takes people on step-by-step process

NEW YORK–If you’re keeping up with the tech scene these days, you won’t hear Mock Series A Term Sheet Negotiations too often. It may be your first time to hear it, as we did, so we went to Orrick’s Total Access last August 24 at CBS to find out how it would unravel for us.

http://blogs.orrick.com/totalaccess/events/event/new-york-mock-series-a-term-sheet-negotiation/

Chris Austin, partner at Orrick, presided over the mock negotiation with Liz Wessel, CEO of WayUp and Ellie Wheeler, principal of Greycroft Partners. Wessel and Wheeler wheeled and dealt their way to the mock negotiation of term sheets, talking about how allocate value, manage the company, investors’ rights and miscellaneous terms as if we were eavesdropping on two people’s conversations. It’s a good exercise for anyone curious about how a startup founder interacts with an investor.

With Austin as the moderator, the two talked their way through allocating value, covering valuation, capitalization, liquidation and dividends. Questions about board composition, protective provisions and drag along rights were also discussed.

Austin suggested 3 to 5 board members for obvious reasons—to avoid deadlocks with 4 board members. Wessel said she would have herself, a co-founder, Wheeler and someone who can serve as an “independent” seat. It’s important to point out why Wessel added Wheeler; it’s common for a VC (venture capitalist) to ask for 1 to 2 seats. The VC will ask for special provisions, preferred director consent. But at Series A, keep in mind that a VC need not be in board majority.

Austin said higher valuation is not always the best. “Look for a good fit, strategic value, understanding of the business.”

For founder vesting, standard schedule is a four-year term with a one-year cliff. For the stock option, the key issue you need to answer is what you will need to compensate your employees between this round and the next. It will depend on the current team.

As for dividends, the advice is to stay away from cumulative dividends. Current market standard is “as if and when declared.”

At liquidation/dissolution, keep in mind that a VC gets the right to receive proceeds first. Also before you can sell, you must give company and investors the right to buy. And if the investors and the company decline to buy, then the founder must give investors a right to participate in the sale.

Elaborating on drag along rights, the discussion veered toward drag-along rights. Investors, it turns out, can force Common stockholders to participate in a sale of the company while also pointing out that drag-along rights are not present in every deal, but becoming more frequent.

Recommendations in terms of managing the company included protective provisions like questioning your ability to satisfy business objectives; consider class voting; and keep standard market terms. If you don’t manage the company well, investors can ask your company to return the money to investors at a specified time. This can be in 7 years or so when the VC comes knocking on your door to ask for their money back. But try to push for exclusion of this term. If not possible, have the terms provide your company enough runaway, say, 5 to 10 years; redeeming investors only receive what they paid plus dividends, or see a higher approval threshold (but other investors must consent).

Orrick’s Mock Series A Term Sheet negotiation takes people on step-by-step process

NEW YORK–If you’re keeping up with the tech scene these days, you won’t hear Mock Series A Term Sheet Negotiations too often. It may be your first time to hear it, as we did, so we went to Orrick’s Total Access last August 24 at CBS to find out how it would unravel for us.

http://blogs.orrick.com/totalaccess/events/event/new-york-mock-series-a-term-sheet-negotiation/

Chris Austin, partner at Orrick, presided over the mock negotiation with Liz Wessel, CEO of WayUp and Ellie Wheeler, principal of Greycroft Partners. Wessel and Wheeler wheeled and dealt their way to the mock negotiation of term sheets, talking about how allocate value, manage the company, investors’ rights and miscellaneous terms as if we were eavesdropping on two people’s conversations. It’s a good exercise for anyone curious about how a startup founder interacts with an investor.

With Austin as the moderator, the two talked their way through allocating value, covering valuation, capitalization, liquidation and dividends. Questions about board composition, protective provisions and drag along rights were also discussed.

Austin suggested 3 to 5 board members for obvious reasons—to avoid deadlocks with 4 board members. Wessel said she would have herself, a co-founder, Wheeler and someone who can serve as an “independent” seat. It’s important to point out why Wessel added Wheeler; it’s common for a VC (venture capitalist) to ask for 1 to 2 seats. The VC will ask for special provisions, preferred director consent. But at Series A, keep in mind that a VC need not be in board majority.

Austin said higher valuation is not always the best. “Look for a good fit, strategic value, understanding of the business.”

For founder vesting, standard schedule is a four-year term with a one-year cliff. For the stock option, the key issue you need to answer is what you will need to compensate your employees between this round and the next. It will depend on the current team.

As for dividends, the advice is to stay away from cumulative dividends. Current market standard is “as if and when declared.”

At liquidation/dissolution, keep in mind that a VC gets the right to receive proceeds first. Also before you can sell, you must give company and investors the right to buy. And if the investors and the company decline to buy, then the founder must give investors a right to participate in the sale.

Elaborating on drag along rights, the discussion veered toward drag-along rights. Investors, it turns out, can force Common stockholders to participate in a sale of the company while also pointing out that drag-along rights are not present in every deal, but becoming more frequent.

Recommendations in terms of managing the company included protective provisions like questioning your ability to satisfy business objectives; consider class voting; and keep standard market terms. If you don’t manage the company well, investors can ask your company to return the money to investors at a specified time. This can be in 7 years or so when the VC comes knocking on your door to ask for their money back. But try to push for exclusion of this term. If not possible, have the terms provide your company enough runaway, say, 5 to 10 years; redeeming investors only receive what they paid plus dividends, or see a higher approval threshold (but other investors must consent).