Financing Term Sheet Deep Dive: Anti-Dilution

Whether you’ve only recently decided to seek out capital for your business or you’ve already received (or made) your first offer, the term sheet (or “letter of intent”) is an integral part of the process.  

In this series we’ll look to shed some light on the legal language contained in that term sheet by taking a “deep dive” into the most often used terms and how choices made in selecting those terms can affect both Company and Investor.  Check out an overview here.

Financing Term Sheet Deep Dive will be published each Monday morning until conclusion. For more information, check out www.hoeglaw.com or drop Rick a line at rhoeg@hoeglaw.com.

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Last week, in discussing the right of Investors to convert their preferred stock into common, we touched on the concept of “anti-dilution” provisions intended to alter the number of shares that the preferred stock might convert into.

Today, we take a deeper look at this complicated concept.

Start-Up Entrepreneur Series: Information and Inventions

In the Start-Up Entrepreneur Series, I will be taking a deeper look into some of the most common questions early stage founders face in putting together and operating their new businesses.  

The Start-Up Entrepreneur Series will be published each Wednesday morning until conclusion. For more information, check out www.hoeglaw.com or drop Rick a line at rhoeg@hoeglaw.com.

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Every new company has (or hopes to have) assets of some kind.  Some are physical. The retailer has his inventory, the service provider her equipment, the tech company its hardware.  For others (or for other parts of the same companies) its intangible. Software, information, prototype designs. But while many companies don’t need to worry about the protection of these “proprietary” assets, for others it is an absolute necessity.

Today we’ll take a look at one of the foundational incorporation documents for these IP-based companies: the Proprietary Information and Inventions Assignment Agreement (“PIIA”).