Fundraising happens to be a long process with several inevitable aspects to bear in mind throughout this complex affair.
Recently, RuleZero’s founder, Srinivas Katta engaged in an interactive session – Masterclass: Get Your Funding Queries Answered at TiE Bangalore. The session began with an introduction to RuleZero’s startup terms repository – The Startup Periodic Table and continued towards understanding nuances that are a part of the fundraising process.
An interesting question raised during the session was “If a company can issue CCPS or equity to an existing customer or not?”.
Addressing this, our founder discussed how the customer can only be issued phantom stock provided they cut a cheque. This means the customer will only be receiving the appreciated value of stock as returns. Another option could be cutting the customer a share in the revenue of the company. While both these options are feasible, at the end of the day, it is a business call and a play on the revenue model of the company.
Some other queries addressed in the session were:
- How to devise equity plans for employees?
- How important is pre valuation round when a company progresses?
- Are convertible notes favourable to one party at a later stage?
- How are convertible notes treated under law?
The session saw active participation and compelling questions from the audience.
You can watch the video linked below to know more.