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I like it, except these two points: 1. You're asking a "bootstrapper" to reimburse up to $5K in attorney fees (in addition to their own fees), while regular De

I like it, except these two points: 1. You're asking a "bootstrapper" to reimburse up to $5K in attorney fees (in addition to their own fees), while regular Delaware C-Corp startups can incorporate and raise pre-seed or seed up to a several millions without involving lawyers at all. Much more capital efficient. 2. > if we invest $100k with a 4x, or $400k Return Cap. The company pays back $100k, so there’s $300k left to pay, then decides to raise a round. We base our conversion on the $300k remaining to be paid, not the $100k we invested. While this might be fair, it looks like double-dipping, especially if you have a low cap. There should be an option to repay it from the new investment without conversion.

tylertringas 8y ago
1. Good point. This is just some boilerplate from fundraising docs that basically means the legal costs of closing the deal are paid out of the investment money (not the founder's pocket). But could be clearer / we could drop it. Legal costs will be minimal. 2. Yes, currently the way we have structured it if the company decides to raise a round of financing and as part of that they want to pay the entire Return Cap to us in full, that is fine.
- CosmicShadow 8y ago
  I hate dealing with unexpected legal costs, especially when cash-strapped, as I had to when raising angel cash. Maybe I was naive, but sometimes people don't know how much it costs just to raise money (something that seems really standard) and that if you can't pay it, you can't close the deal. However taking it out of the funds given is a bit more fair at least, but make sure people are aware of it so they don't feel cheated. I would imagine someone would want to have their own lawyer look over everything anyway for this stuff before signing anything, but anything you can do to reduce cost is good. It's so minor and a necessity at the start, but has the huge chance to set off the relationship and optics on a bad start. It's like you are giving free consulting resources (your money though instead of time) for the chance to close a deal you want as the investor, keep the client happy and make it as lubricated a process as possible. Eat it so that it doesn't turn into something that feels like an early scam attempt that'll ruin the future of the relationship.

tylertringas 8y ago

1. Good point. This is just some boilerplate from fundraising docs that basically means the legal costs of closing the deal are paid out of the investment money (not the founder's pocket). But could be clearer / we could drop it. Legal costs will be minimal. 2. Yes, currently the way we have structured it if the company decides to raise a round of financing and as part of that they want to pay the entire Return Cap to us in full, that is fine.

CosmicShadow 8y ago
I hate dealing with unexpected legal costs, especially when cash-strapped, as I had to when raising angel cash. Maybe I was naive, but sometimes people don't know how much it costs just to raise money (something that seems really standard) and that if you can't pay it, you can't close the deal. However taking it out of the funds given is a bit more fair at least, but make sure people are aware of it so they don't feel cheated. I would imagine someone would want to have their own lawyer look over everything anyway for this stuff before signing anything, but anything you can do to reduce cost is good. It's so minor and a necessity at the start, but has the huge chance to set off the relationship and optics on a bad start. It's like you are giving free consulting resources (your money though instead of time) for the chance to close a deal you want as the investor, keep the client happy and make it as lubricated a process as possible. Eat it so that it doesn't turn into something that feels like an early scam attempt that'll ruin the future of the relationship.