Honorary Mentions - ... • 1y
Starting a startup is exciting, but understanding the shareholder agreement (SHA) is crucial. Today, let's focus on Dilution. What is dilution? Imagine you and a friend each own half a pizza (50% each). If you bring another friend in and share more slices, your ownership percentage (of pizza) goes down. In a startup, dilution happens when the company creates new shares and sells them to investors.This increases the total number of shares outstanding, decreasing your ownership percentage. The SHA should clearly state how much dilution can occur. What to look for in the SHA: • Pre-emptive rights: This allows you to buy your proportional share of new offerings before they go to outsiders, minimizing dilution. • Anti-dilution provisions: These can protect your ownership percentage by adjusting share price or conversion ratios if new shares are issued at a lower price than yours. Next time: We'll explore another key term in the SHA - Board of Directors!
Honorary Mentions - ... • 1y
Last time we discussed dilution in SHAs. Today, we tackle the Board of Directors (BOD)! The BOD: This group oversees your startup's big picture strategy. The SHA defines how many board members there are and how they're chosen. Why it matters: Havin
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You've got a killer startup idea, but building it needs a team. Your co-founder brings the marketing, while you do coding. But how do you ensure they're in for the long term? Here comes the Co-founder Vesting Schedule... What is a co-founder vesting
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🌟 The VIP Pass of the Investment World: Unraveling PREFERENCE SHARES In the bustling world of investments, these shares are like the golden tickets that come with some extraordinary perks. In simple words, Companies need investments but may not wa
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can mutual fund be a profitable investment? A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its po
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