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Preparing For Venture Capital
Presented by: Tony Ricciardella, Grant Thornton
July 8, 2003 – FundingPost DC Venture Capital Workshop
D.C.: FundingPost brought together 60 CEOs to learn discuss how entrepreneurs today are “Preparing for Venture Capital” with Tony Ricciardella from Grant Thornton. Topics included:
- Corporate Structure
- S-Corporation
- Advantageous from a tax perspective since profit and losses pass through to the shareholders
- Avoids double taxation in the event of a sale of the Company.
- Not very flexible when try to raise capital
- Limited number of shareholders (75)
- Limited to one class of stock
- VC’s investment would probably bust the S-Corp election
- Limited Liability Corporation
- Has the benefits of a partnership and a Corporation. Can make the election (check the box) to be taxed as a C-Corp.
- Permits more than one class of stock and more than 75 shareholders.
- C-Corporation
- Permits more than one class of stock and more than 75 shareholders.
FundingPost is proud to share our workshop presentation from leading service providers such as Grant Thornton as a benefit to the entrepreneurial community.
We are happy to share this presentation with you as a benefit to the entrepreneurial community.
Please click here to view the free presentation in PDF format:
Preparing For Venture Capital
Adobe Acrobat required.

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Raising Venture Capital – What to Expect:
- Funding from the venture capitalist may come in the form of debt or equity financing or some combination of both (i.e. debt with warrants).
- Need to ensure that all consideration exchanged is properly recorded (for example, in a debt with detachable warrants transaction, the value of the warrants would be recorded as a contribution to equity and a discount to the face amount of the debt).
- Beware of beneficial conversion features in convertible equity or debt instruments.
- After the investment you will have a new member(s) on the board.
- Will probably be required to have an audit performed annually by a reputable accounting firm.
- Will likely have an audit committee that will meet periodically throughout the year to discuss accounting and auditing matters.
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