Posted on December 19, 2016 at 6:44 pm.
In our previous post, we discussed the issues that come up when structuring an accelerator investment. Keeping that in mind, we have prepared a comparison of some of the investment terms used by leading accelerators in the U.S. and Europe.
|YC||500||Founder Institute||Polish Accelerator||Baltic
|Main instrument||Simple Agreement for Future Equity (SAFE)||Keep It Simple Security (KISS)||Founder Agreement + Warrant||Acceleration Agreement (Umowa Akceleracyjna)||Common Stock Purchase Agreement|
|Pro rata/preemptive rights/Right of First Offer||Right to purchase pro rata share of any equity securities or convertible securities issued by company in a financing.||Accelerator is given 15 days prior written notice of offering of Preferred Stock in next financing and has right of first offer to participate on same terms as the other investors and for the lowest price.||-||Accelerator has right to participate pro rata in equity issuance on the same terms as the other investors and for the lowest price.||Company shall not issue any news shares without them first being offered to Accelerator for subscription in proportion to their then existing holdings.|
|Information rights||Company must furnish information regarding company securities sold in connection with fund-raising activities, as well as mergers, acquisitions, sale of assets and change of control. Automatically terminate upon change of control or IPO or dissolution/liquidation of company.||Company must deliver financial statements within 30 days after end of each of the first 3 quarters of each fiscal year & within 90 days after the end of each fiscal year. Upon request, company must deliver information relating to financial condition, business or corporate affairs. No obligation to provide confidential information, Accelerator agrees to maintain confidentiality of all information provided to it.||-||Accelerator may inspect the account books, company documents and financial statements at any time, and carry out an audit.||Company must furnish report setting out plans for the following 3-month period, update on progress and developments and overview of material circumstances and issues, provide information about business and financial affairs of the Company, at Accelerator’s cost|
|Equity||6.06%||5%||3.5%||X% (75000 PLN funding)||8%|
|Veto rights||Prior written approval of Accelerator is needed to enter into a change of control transaction, adopt an equity incentive plan, form a new subsidiary, waive agreements between company and its founders.||-||-||Approval of Accelerator is needed for: decrease in share capital, in-kind contribution for increase of share capital, non-exercise of right of first offer, change to charter, encumbrance or disposal of company’s IP, liquidation, sale or establishment of limited property right on company’s business, change in scope of company’s activity, incurrence of indebtedness of over 100,000 PLN, conducting a competitive business by board members, acquisition or sale of real property or a share in real property, IPO, encumbrance on shares, share redemption, additional capital contribution by shareholders.||Prior written approval or consent for: change of control, selling, transferring, licensing of IP, amending by-laws or constitutional documents, increasing or decreasing share capital or issuing any equity securities, or securities convertible into or exercisable for equity securities, effecting merger, split, reorganization, dissolution, forming a wholly-owned subsidiary, waiving provisions of IP agreements between Company and Founders.|
|Observer rights||-||Can attend board meetings in nonvoting observer capacity.||-||-||Entitled to appoint a non-voting observer to attend all meetings of the governing bodies of the Company.|