Tuesday, April 23
Wednesday, April 24
8:30am - Noon (Registration and coffee available at 8:00am)
You’ve met the founding team and really like the company. Now it’s time to know if the deal is right for you. As a new angel, you’ll need to understand the term sheet, the document that outlines the terms and conditions of the agreement between the investors and the startup. This half-day introductory seminar provides clear, practical information on early-stage term sheets, focused on helping newer angel investors understand deal terms. The course includes lectures, interviews and an engaging exercise for attendees, using a publicly available term sheet template for seed and early stage preferred shares deals. The fun exercise will build your understanding of sound term sheets aligned with the interests of both entrepreneurs and early-stage investors, and setting the stage for follow-on investors. Key concepts covered in the seminar include:
- Corporate structures preferred by investors
- Advantages and disadvantages of equity versus debt and derivative alternatives
- Practical framework for the important components of term sheets
- What terms like “liquidation preference” and “participation rights” mean
- Key terms to address investors’ concerns
- Basic philosophy for negotiation
The course is based, in part, on content in an upcoming book, “Termsheets and Valuations,” by Hambleton Lord and Christopher Mirabile of Seraf Investor.
Angels face many challenges when investing in startup ventures. One crucial, but sometimes overlooked, detail is the impact of new funding on the company’s capital structure. Whether funding comes as equity or debt, the savvy investor needs to understand how this round of funding will impact the ultimate outcome for all shareholders. So early stage investors need to be fluent in the structure of cap tables to understand the impact on their potential returns from current and future rounds of funding.
ACA in cooperation with VentureSouth offers entrepreneurs and investors alike a practical education in understanding the details of cap tables through the lifecycle of a startup venture. This workshop will include a combination of presentations, exercises and a case study to illustrate common cap table mathematics a startup and its investors must consider. Among the important topics to be illuminated are the impacts of: valuation, liquidation preferences, anti-dilution terms, convertible notes, and option pools and vesting.
This workshop assumes some familiarity with basic cap tables, typical deal terms and Excel spreadsheets. (Basics of cap tables can be gained through the ACA webinar on the topic available here). Participants are urged to bring a laptop or tablet computer to the workshop to enable participation in the exercises. While this workshop has been presented previously by VentureSouth, this is the initial offering to other members of ACA. Matt Dunbar, Managing Director of Venture South and a Board member of the Angel Capital Association will serve as lead instructor for this workshop.