Dilution of Owners’ Equity and anti-dilution terms can be a very complicated subject for investors and startups. This article takes an overly simplified approach and focuses on dilution and antidilution in investment and how startup equity finance impacts owners’ equity. The first subject matter will be what is dilution and
A capitalization table (cap table) is needed when presenting to investors the structure of the company’s equity pre and post-investment Money. It easily identifies pre-money valuation and post-money valuation, and provides information on which parties own which classes of shares, warrants, options and other rights to purchase equity over time.
Taxation strategy is one of the key considerations when forming and funding a startup business. This article addresses key considerations of capital contribution tax on structuring a tax-free transaction for the stockholder(s) when contributing cash or property to a corporation in exchange for stock from the corporation. Such tax-free contribution is addressed under Internal Revenue Code Section 351.
When business owners are presented with option to sell equity for fund raising, they have several options to consider because not all equity shares are created equal. One common approach is the sale of preferred stocks. This article covers the key variations of preferred with unique rights which can be provided to the investors.
How to valuate a startup for equity financing is often asked by startups and early stage companies. There is no exact formula when assembling a valuation for a startup company. This is because there are numerous unknown or unproven factors that may greatly affect the outcome of the companies performance