Equity Crowdfunding Blog

Author Archives: Judd Hollas

Common Stock vs. Preferred Stock: Understand The Differences

All corporations, whether public or private, have shares of stock. Each share carries a price, whether established by the market (investors) or approximated by the company itself (pre-money valuation), that when combined, represent 100% of the company’s equity. 

When one buys a share of stock, they are buying a sliver of equity ownership in the company. The type of stock they purchase will dictate if and when they have rights to distributions of money and votes on corporate actions.

In this article, we cover what each form of ownership is (common stock vs. preferred stock) and how they differ for private and public companies. 

Term Sheet Guide: Important Terms, Clauses, and Closing Deals

entrepreneur reviewing term sheet with counsel

A term sheet can be used in a number of transactions, such as the acquisition of a company or a partnership agreement, to establish the terms of a deal between two or more parties. 

In the context of this article, we are going to focus on the term sheets commonly exchanged between investors and entrepreneurs in a Series A or equivalent funding round

We attempt to simplify and clarify the actual terms that are common in a standard term sheet and some cautionary clauses to be aware of before agreeing to the terms.

11 Business Pitch Tips from Fundraising Experts

business pitch being delivered to a group of venture capitalists

There are many reasons to pitch your business — investment, sales, customer acquisition, recruiting, and more. In this article, we will focus on strategies to pitch when raising early-stage angel or venture capital.

We cover some of the high-level considerations and tips for pitching investors, an outline for early-stage pitch decks, and advice gathered from watching and reading the pitches and pitch decks of the most well-funded and successful startups. 

Pre-Money vs. Post-Money Valuations: How to Calculate Each

business woman calculating pre and post money valuations for startup business

There is a surprisingly large number of business finance terms that are prepended with the “pre-” flag: “pre-seed”, “pre-IPO”, “pre-revenue” and, you guessed it, “pre-money valuation.” Perhaps this is because evaluating early-stage business finance is preposterously difficult. 

A company’s valuation can be a controversial talking point in the annals of VC boardrooms and the source of much back-and-forth during term sheet negotiations. This pain point has even led early-stage investors to adopt convertible notes as a way to pass the hypothetical valuation torch on to future investors. 

Debt vs Equity Financing: Which is Right For Your Business?

founders discuss debt vs equity when deciding how to raise startup funding

Founders and operators face many difficult and important decisions in their line of work; and where to source financing for operations and growth is one of the most important.

Debt and equity are high-level classifiers of the various funding sources but each has a number of options, from the traditional routes like banks and financial institutions to the modern day methods like crowdfunding and peer-to-peer lending.

In this article, we compare and contrast debt versus equity including the various types, advantages, disadvantages, and examples of each. 

What are Alternative Investments and Why Consider Them?

investor researches alternative investments

There’s an old saying that “no one ever got fired for buying IBM.” Equivalent job security in the financial advisory industry has been built on the consistent recommendation for a portfolio allocated between stocks and bonds. 

Is this still good and relevant advice for everyone? Are there any deviations or alternatives to this investing strategy? If you are interested in exploring alternative strategies and opportunities for your investments to produce growth, income, security, and more, this article is for you.

Venture Capital Trends For a Well-Funded Future

venture capitalist analyzing investment trends

Investing in startups is essentially the art of trend spotting. 

Venture capitalists place bets on the distant future – like decades into the future. Most VCs consider themselves contrarian thinkers and according to famed Benchmark VC and entrepreneur Andy Rachleff, in order to be successful you must be non-consensus and right.

In reality, there appears to be some consensus among investors, which shows up in the form of venture capital trends. In the last decade (2010s), for example, mobile app-based services like Uber, Lyft, DoorDash, Robinhood, and more were certainly a trend in both business model and venture capital investments. 

Startup Funding Rounds: Series A, B, C and Beyond

Venture-backed startups make headlines, but they’re far from the norm. For the average startup, funding rounds are generally limited in frequency and conservative in the amount raised. 

The truth is, most startups either get acquired, fail after fundraising, or fail to raise funding entirely. And those that successfully raise a round of funding are by no means guaranteed to raise another.

In this article, we cover the common startup funding rounds, details about each round, and an example of a startup navigating the valuations and dilution of each round. 

What is Seed Money and How Can Startups Get it?

entrepreneurs receiving seed money from an investor

It’s nearly impossible to look at an acorn and accurately determine whether it will establish roots and if it does how big the oak tree will be. Startup ventures are basically the little seeds (acorns) that need financial husbandry (water) to grow into large and healthy businesses (oak trees). 

Companies are founded on a hypothesis for something entirely new or something existing that could be done differently (i.e. better, faster, cheaper, etc.). Either way, it takes seed money to put these hypotheses to the test and achieve successful results. 

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