Forbes Column 2010: These Companies Are Built To Enjoy
Compelling opportunities for angel investors and entrepreneurs lie with companies like these. Read more in this week’s Forbes column, These Companies Are Built To Enjoy.
This segment is a part in the series : Forbes Column 2010
. India's Rising Tech Stars . America's K-12 Education Strategy . Facebook's Ideal Future . CIO Priority . A Road Map For India . Entrepreneurs . The Way Forward With Health Reform . Why B-Schools Set Up Entrepreneurs To Fail . What B-Schools Don't Teach You About Venture Capital . An Underused Tool For Job Recovery . Intel In The Untethered Era . Palm's Missed Opportunity . Financial Instruments To End The Recession . The Promise Of E-Commerce . Bootstrapped SaaS Gains Critical Mass . The Knock-On Effect Of Global English . Financial Reform . Taking On Microsoft, Google From India . Families . These Companies Are Built To Enjoy . Calling All Angel Investors
Has anyone seen a legal structure where early-stage investors have the right to true dividends? I have not.
For example, company is 3 years old and has $2,200,000 in revenue with $500,000 profit. Assume this is the cash flow, too. Let’s say $200,000 or 40% of the profits could go out to the investors, pro rata by rights, or maybe preferreds get the money first. My question is: Have you ever seen this “baked into” a set of legal docs? I do not believe this can be negotiated later, especially if the founders, the friend and family, the angels, the later-stage investors, etc. all have different goals with the company. Too messy to depend on a shareholder or board vote to start paying dividends.
If you have seen a workable mechnism built into any signed document in a venture deal, I would like to know about it and get a template copy. And exactly how it was structured.