Question

1.Your Founder’s stock vests evenly over four years. How much will you own if your employment is terminated after two years?

2.In a Venture Capital partnership normally, when do the limited partners invest their cash?

3.The General Partner of a Venture Capital limited partnership consists of whom?

Answer 1

1. For better understanding this situation with an example:

Assuming-

At formation, Paul Co. issues 4,000,000 unvested shares to founder John. The shares are issued on January 1, 2014, when John pays the company $40.00 US Dollars.

* Vesting of unvested share each  month over a period of 4 years with a 1 year vesting clif.

* commencement of vesting on the date the share issued (i.e., Jan 1, 2014)

* 100% double trigger vesting acceleration.

If Paul Co. is acquired on February 1, 2016, the vesting of 100% of the 1,250,000 unvested share is accelerated so the Founder John is vested in all 4,000,000 shares as October 1, 2016.

2. In a Venture Capital partnership normally, limited partners invest their cash-

There are typically six stages of venture round offered in venture capital:

a) seed funding: the earliest round of financing needed to prove new idea.

b) start up early stages firms

c) growth series a round: Early sales and manufacturing fund

d) second round : working capital for second stage company

e) on acquisition at the time of IPO launch

f) Bridge financing.

3. The General Partners of a venture capital limited partnership consist to structured as partnerships, the general partners of which serve as investment advisers  to the venture capital fund.