Although many of my clients are established companies, a large percentage are start-ups in various stages. Some require a first patent application to tempt venture capitalists. Sometimes they want their patent portfolio summarized for an audit before a second or third round of fundraising. Venture Capital Funds and industrial incubators sometimes come to me for a due diligence report on the IP portfolio of a company they are interested in. I don’t get involved in the contracts between investors and entrepreneurs, but occasionally entrepreneurs complain about dilution and other issues they have with funders.
In all fields, there is a specialist vocabulary and a basic knowledge of terms is important, for anyone even peripherally involved in fund-raising for start-ups.
Recently, an associate of mine from US Law firm Womble & Carlisle kindly gave me a copy of a book by one of their partners, Clinton Richardson. The book, called 4.0 Growth Company Guide, is an alphabetical arrangement of articles about different company funding concepts. The entries are more than definitions. They try to present the rationale behind the concept and what the consequences of using one funding model or another are to initial investors, entrepreneurs and second round funders.
Concepts like Milestones, Angels, Leverage, Clubbing, Safe Harbors, Downside ISOs, leverage and buyout are explained in friendly, factual, neutral terms. The book seems like a handy reference for anyone getting involved in start-ups.
The book has been around since 1987. It is now in its fourth edition.
ISDN 978-0-6151-6409-0, the price on the jacket is $79.50. Not bad for 445 pages of reference material.
For those of you confused by the picture, the Wombles of Wimbledon Common featured in a TV series on BBC in the Seventies. They were very ecologically friendly and into recycling by making use of the things that everyday folks left behind. One of their cousins, the Mac Womble, lived in Scotland. It seems an appropriate picture for a firm called Womble & Carlisle.