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Silicon Valley Spring 2013
Applications: Mar 17, '13
Sessions: Apr 01, '13 - Jul 09, '13
Vision
Our vision is to Globalize Silicon Valley by creating and fostering local startup ecosystems in promising markets across the globe. We aim to help launch 1,000 technology companies per year in over 50 cities worldwide.
Sponsors
Wilson Sonsini Goodrich & Rosati is the premier legal advisor to technology and growth enterprises worldwide, as well as the investment banks and venture capital firms that finance them. Over the past four decades, Wilson Sonsini Goodrich & Rosati has established its reputation by having an unmatched knowledge of its clients' industries and deep and long-standing contacts throughout the technology sector. The firm's legal expertise serves clients at all stages of growth, from venture-backed start-up companies to multibillion-dollar global enterprises. The firm's clients include some of the most recognized names in the technology, retail, life sciences, venture capital, and finance sectors. The firm has offices in Austin, Palo Alto, New York, San Diego, San Francisco, Seattle, Shanghai, and Washington, D.C.
First Republic Bank and its subsidiaries provide private banking, private business banking and the full range of wealth management services with an emphasis on exceptional relationship-based service and a solid commitment to responsiveness and action.
Ravix Group - Ravix Group Inc.provides seasoned consulting expertise to outsource the finance, human resources, and facilities functions of early-stage and middle market companies so that management can focus on their priorities to increase the value of their company.
Purplepatch Services is a strategy consulting firm offering technology firms Marketing Communications and User Experience Design solutions.
New Plain Preferred Term Sheet
TheFunded Founder Institute has just released a new "Plain Preferred" term sheet with support of the blogosphere, including top-rated venture capitalist, Fred Wilson.
Chris Dixon posted about an ideal term sheet for first round funding, which started an blogosphere discussion about terms. Fred Wilson came out in support of this simplified term sheet, so TheFunded Founder Institute has engaged WSGR to author the exact template agreed on by various entrepreneurs and investors for anyone to use:
http://www.docstoc.com/docs/10303638/FFI-Plain-Preferred-Term-Sheet
The new "Plain Preferred" term sheet compliments the founder-friendly incorporation documents already developed by the Institute, which are being used by approximately 50 start-ups both within and outside of the Institute. TheFunded.com Terms section submission form lists nearly 100 different terms that are in common use by venture capitalists. Fred Wilson, Chris Dixon, and others in the debate agree to a dramatically simplified term sheet with some significant changes against the norm:
- A 1x liquidation preference, versus a 1x to 3x range in recent deals reported on TheFunded.com. A "1x liquidation preference" without participation means that investors choose to either (a) get their money back or (b) convert to equity and get the equity value only. This is a downside protection term.
- Single trigger vesting, which allows founders to vest all of their equity and make money in an exit. Many investors require "double trigger vesting," which means that the company needs to sell and the founder needs to be terminated for his or her shares to vest.
New and complex terms, such as "Super Pro Rata" investment rights, are removed from the Plain Preferred template, since they add marginal value to investors while adding significant complexity to deals. Legal costs are rising while venture returns are shrinking. The average Series A investment costs $50,000 in legal fees to close. Meanwhile, the founders themselves are being squeezed with more and more terms that lock up exit value, creating a misalignment of incentives.
The Plain Preferred term sheet aligns the investor and the entrepreneur incentives. This is a rare example of a term sheet where the percentage ownership of participants will correlate closely to returns generated in an exit.
