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Cairncross & Hempelmann

Don’t Get Left Empty-Handed: The Importance of Liquidation Preference

In the world of venture capital financing, one of the most important terms, behind price/valuation, is liquidation preference. As a startup company founder, having a solid understanding of liquidation preference is incredibly important, as it could mean the difference between whether or not you collect any proceeds from a sale of your company.

Cairncross & Hempelmann

Noncompete Agreements Becoming Obsolete?

The state House of Representatives may soon send noncompete agreements down the way of the dodo bird . . . toward extinction.

Cairncross & Hempelmann

The Rules on Who Can Invest in Your Startup May Be Changing!

The Securities and Exchange Commission (“SEC”) is taking a fresh look at the “accredited investor” definition with regard to Rule 506 (the securities registration exemption upon which most startups rely when raising angel and venture capital money). This could affect your ability to raise money for your startup.

Cairncross & Hempelmann

Are Special Classes of Founder Stock Right for You?

There is a tried and true structure for capitalizing a technology startup: conventional common stock to the founders, conventional common stock reserved for employees in a stock option pool, and preferred stock to investors.

Cairncross & Hempelmann

How Do Stock Options Work?

For most high growth emerging technology startups, equity is cheaper than cash when it comes to compensating employees.

Cairncross & Hempelmann

Forming Your Startup the Silicon Valley Way

In most jurisdictions, all you need to do to legally incorporate is submit your articles of incorporation to the Secretary of State of the jurisdiction in which you want to incorporate and adopt a set of bylaws, and many online companies (and attorneys) will take care of these two things for you for a nominal price.

Cairncross & Hempelmann

Don’t Give Away the Farm in a Bridge Financing: Conversion Discounts vs. Conversion Caps

In the world of convertible debt, arguably the single most important term for both the startup and the investor is the provision concerning when and how the investor’s convertible promissory note converts into equity.

Cairncross & Hempelmann

The Interests of Investors and Founders Aren’t Always Aligned

Founders of technology startups often believe that their interests are aligned with those of their investors, and that belief is generally true. However, there are many situations where the interests of the founders and other shareholders differ from those of the outside investors.