News & Events

articles

  • Changes in Convertible Instruments for Early Stage Financings

    By Procopio Partner Roger Rappoport and Senior Associate Aaron Sokoloff There are currently two main types of convertible instruments that are in widespread use for pre-Series A and other “bridge” financings: convertible promissory notes and SAFEs (Simple Agreements for Future Equity). Each of which are alike in that the amounts invested under the applicable instrument convert into shares of the issuing company in question, upon the happening of certain events, which is most often a s...

    Read More
  • How Your Company's Valuation Can Be Impacted By Convertible Notes

    By Procopio Partner Paul B. Johnson and Attorney Aaron Sokoloff With valuations in venture capital financings at historically high levels, companies are finding that “valuation caps” and other related terms in convertible notes and other convertible instruments are having a significant effect on company capitalization. For example, if entrepreneurs and investors do not consider the effects of outstanding convertible notes when negotiating the terms of an equity financing, there can be...

    Read More
  • When Investors Require Side Agreements

    By Procopio Partner Paul B. Johnson and Attorney Aaron Sokoloff It has become increasingly common in venture financings for investors to require the company to enter into “side letters” – i.e. separate agreements between the company and one particular investor, which are separate from the main investment documents that are signed by all of the investors. Side letters may provide a particular investor with some unique set of rights (for example, information rights beyond what the oth...

    Read More