Guidance

Guidance

NVCA: Protective Provisions

By MoFo ScaleUp Team

This article is one in a series of articles explaining various terms commonly seen in term sheets issued by venture capital funds in connection with equity financings. What are protective provisions? Protective provisions are a list of actions or events that a company cannot take or consummate without first obtaining a specified approval by investors (either at the stockholder level or board level). As discussed in additional detail below, these minority protections are generally targeted... Read more »
Read More
Funding

NVCA: Pay-to-Play Provisions

By MoFo ScaleUp Team

This article is one in a series of articles explaining various terms commonly seen in term sheets issued by venture capital funds in connection with equity financings. What are pay-to-play provisions? As the name suggests, “pay-to-play” provisions require existing investors to pay (i.e., invest) in order to continue to play (i.e., maintain investor rights). Specifically, pay-to-play provisions usually require existing holders of preferred stock to purchase, on a pro rata basis, additional shares of the Company in... Read more »
Read More
Guidance

Key Highlights from California’s New Diversity Reporting Law

By MoFo ScaleUp Team

On October 8, 2023, California Governor Gavin Newsom signed into law Senate Bill 54 (the “Diversity Reporting Law”). The Diversity Reporting Law is intentionally broad in its scope and is intended to help highlight and address the lack of funding for companies owned by diverse owners, in particular minorities and woman. At a high level, commencing on March 1, 2025, the Diversity Reporting Law requires certain entities with a California nexus to file an annual report detailing... Read more »
Read More
Guidance

Equity Fundamentals: Single- vs. Double-Trigger Acceleration Explained

By MoFo ScaleUp Team

When a founder, employee, or other service provider has shares or options subject to vesting, one common issue they may want to solve for is how unvested equity is treated at the time the Company is sold—single- and double-trigger-acceleration are two common approaches, although single-trigger tends to be more controversial.  What is Acceleration? Acceleration refers to a provision in a stock option or restricted stock agreement that automatically accelerates the vesting of the equity if... Read more »
Read More
Expansion/Guidance

I am Founding a Startup and Hoping to Raise Venture Capital Funding in the U.S. Which Type of Entity Should I Form?

By MoFo ScaleUp Team

As a startup founder, you’ve got a list a mile long of complex choices that you need to get right—finding the right co-founders and key team members, perfecting the pitch, and fine-tuning the MVP tend take the limelight—but one critical choice is picking the optimal type of business organization for your new venture. At the highest level, when deciding on which type of business entity to form, founders should consider issues such as 1) legal... Read more »
Read More
Funding

Ask a MoFo: What Are the Private Company Tender Offer Rules?

By MoFo ScaleUp Team

Private company tender offers have become increasingly common due to the significant amount of available capital from venture capital/corporate venture capital, private equity, strategic and cross-over investors as well as headwinds in the IPO and broader public markets. With companies remaining private longer, early employees and investors often seek out opportunities to receive some cash proceeds before a total liquidity event in the form of a public offering or M&A sale transaction. Tender offers can be used... Read more »
Read More
Expansion/Formation/Funding/Guidance

I Have a Company That Was Formed in Another Country, but I Want to Set up My Business for VC Investors (Ideally Having Them Invest in a Delaware Corp.). How Do I Process and Structure Something like That?

By MoFo ScaleUp Team,

Emerging companies formed outside the United States may want to redomicile their businesses to the United States to, among other things, enhance their fundraising prospects. U.S. venture capital investors often require non-U.S. companies to flip into Delaware corporations as a condition to investment. Given that custom and preference, non-U.S. startups may choose to redomicile to the United States in advance to well position themselves to receive U.S. venture capital quickly, eliminating potential setbacks or pre-conditions during the... Read more »
Read More
Formation/Guidance

What Is an 83(b) Election, and Do I Need to File One?

By MoFo ScaleUp Team

If you’re reading this, chances are this is not the first time you’ve heard of the 83(b) election (and if it is, then definitely keep reading). The “83” in “83(b) election” refers to Section 83 of the Internal Revenue Code, and despite the relative simplicity of the concepts that this particular section deals with, the 83(b) election may be one of the most important tax filings you make while on your startup journey. Read More
Read More
Formation/Guidance

What Fiduciary Duties Do I Have as a Director of a Delaware Corporation?

By MoFo ScaleUp Team

You’re an entrepreneur, you form your first company, and suddenly you carry the title of founder, director, officer, and/or employee all at once. When running your business, it may feel like all of your roles blur together. However, it’s important to remember your different roles when taking action on behalf of the corporation in order to protect yourself from liability. A fiduciary is someone who is required to act for the benefit of another person on... Read more »
Read More

Oops, Post Not Found!

Uh Oh. Something is missing. Try double checking things.