The start-up capital for most businesses is provided not only by their founders but also by “angel investors” – either “friends and family” of the founders or professional investors who put capital, or other resources, into the company at its earliest stages. The capital provided by these angel investors is essential to starting and growing the business. But as the company grows, their angel investment is often replaced by borrowing from banks, larger equity investments from institutional investors or investment funds, or simply by internally generated cash flow. The challenge is protecting the interests of early investors as the company grows and those interests are displaced by those of others. This program will provide you with a practical guide to structuring angel investments depending on the type of investors involved, drafting the essential documents for the deal, anticipating changes to the structure of the company, and common traps of friends and family investments.
Structuring and drafting “angel” investments in businesses
Differing structures “friends and family” and professional investors
Common problems in “friends and family” investments
Essential terms in angel investment documents – preferred returns, non-dilution, control, non-competition
Choice of entity considerations given nature of business, type angel investors, and future plans of the company
Anticipating future investments and how that impacts early angel investors
James C. T. Linfield is a partner in the Broomfield, Colorado office of Cooley, LLP, where he is Partner-in-Charge of the firm’s Colorado offices. His practice focuses on representation of public and private technology companies and venture capital funds, with an emphasis on corporate finance, mergers and acquisitions and strategic alliances. He has deep experience advising start-ups, venture-backed companies, public entities and investors across a wide variety of industries, including biotechnology, medical devices. Earlier in his career, he served as Chief Financial Officer and General Counsel of a biotechnology company. He is a member of the board of directors of the Deming Center for Entrepreneurship at the University of Colorado. Mr. Linfield earned his A.B., magna cum laude, from Harvard College and his J.D., magna cum laude, from Harvard Law School.