Morgan Lewis TCN presentation - seed and venture financing in three acts

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SEED (AND VENTURE) FINANCING

A PLAY IN THREE ACTSNOVEMBER 1, 2016

Will Perkins, Partner

Dinesh Melwani, Partner

Stef Lefebvre, Associate

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CAST

Founder #1: Dinesh Melwani

Dinesh has spent many years in business development at a large technology company, TechCo. He andStef are contemplating leaving to launch a new tech start-up, SpeedyCharge. Dinesh has estimated thatSpeedyCharge needs between $750,000 to $1,000,000 to develop a beta version of the product and placeit with a local electric car club who have signed on to beta test it.

Founder #2: Stef Lefebvre

Stef, like Dinesh, has spent many years at TechCo, in engineering. He and Dinesh met about six monthsago and discovered a mutual interest in electric cars. Stef was working on an idea at night and onweekends that addressed charging times for electric vehicles. Having spotted the growing interest inelectric cars, Dinesh and Stef started further work to develop a product that sits between the power source(i.e., wall plug) and the car charging port that speeds charge times by 30%-50% (in early lab tests of acrude prototype).

Seed Investor: Will Perkins

Will, a lawyer by training, now spends his time investing in early-stage growth companies, and togetherwith his group of old friends, coordinates their angel/seed investments.

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SETTING

Previously...

Originally introduced by email through a mutual connection, Dinesh and Will had a long teleconferencewhere Dinesh talked Will through SpeedyCharge’s pitch deck and its business model. Will expressed aninterest in investing, subject to meeting in person to discuss and negotiate agreeable terms.

Now at BeerHall...

Dinesh and Will are meeting in person for the first time at a local craft beer pub to discuss and negotiateterms for Will’s seed investment.

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SPEEDYCHARGE

SPEEDY-CHARGE, INC.

Model of Capitalization Table

as of February 29, 2016

SERIES SEED

Pre-Money

Type Shares Options Total %

Class and Series of Capital Stock:

Common Stock

Founders 900,000 900,000 100.0%

Total 900,000 0 900,000 100%

SPEEDY-CHARGE, INC.Model of Capitalization Table

as of February 29, 2016

SERIES SEED

Pre-Money

Type Shares Options Total %


Common Stock

Founders 900,000 900,000 90.0%

Option, Warrants and Other Securities:

Equity Incentive Plan

Granted/Committed - - 0.0%

Available for Grant (*) 100,000 100,000 10.0%

Total 900,000 100,000 1,000,000 100%

SPEEDY-CHARGE, INC.Model of Capitalization Table

as of January 19, 2016

SERIES SEED

Pre-Money Post-Money

Type Shares Options Total % Shares Options Total %


Common Stock

Founders 900,000 900,000 90.0% 900,000 900,000 60.0%

Others - - 0.0% 0 0 0.0%

Series Seed Preferred Stock 500,000 500,000 33.3%



Granted/Committed 0 - 0.0% 0 - 0.0%

Available for Grant (*) 100,000 100,000 10.0% 100,000 100,000 6.7%

Plan Increase, Seed 0 - 0.0% 0 - 0.0%

Total 900,000 100,000 1,000,000 100% 1,400,000 100,000 1,500,000 100%

SPEEDY-CHARGE, INC.



SERIES SEED




Common Stock

Founders 900,000 900,000 90.0% 900,000 900,000 54.6%

Others - - 0.0% 0 0 0.0%






Plan Increase, Seed 147,059 147,059 8.9%

Total 900,000 100,000 1,000,000 100% 1,400,000 247,059 1,647,059 100%

SPEEDY-CHARGE, INC.



SERIES SEED




Common Stock

Founders 900,000 900,000 77.5% 900,000 900,000 51.7%

Others - - 0.0% 0 0 0.0%






Plan Increase, Seed 161,290 161,290 13.9% 161,290 161,290 9.3%

Total 900,000 261,290 1,161,290 100% 1,480,645 261,290 1,741,935 100%

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ACT I

• Angel/seed/VC ❒

• Valuation ❒

• Cap table ❒

• Pre-money ❒

• Post-money ❒

• Option plan ❒

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SPEEDYCHARGE

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ACT II

• Convertible notes ❒

• Preferred stock ❒

• Priced round ❒

• Conversion cap ❒

• Vesting ❒

• Pre-emptive rights ❒

• Blocking rights ❒

• Protective provisions ❒

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SPEEDYCHARGE

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ACT III

• Board seat ❒

• Observer ❒

• Information rights ❒

• Timing ❒

• Drafting ❒

• Counsel ❒

• Expenses ❒

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ACT IVWhat didn’t come up...

• Dividends ❒

• Participating preferred ❒

• Anti-dilution ❒

• Weighted-average ❒

• Registration rights ❒

• Full ratchet ❒

• ROFR ❒

• Co-sale ❒

• Drag ❒

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William [email protected]

THANK YOU

Call us -- we genuinely love these topics and arealways happy to brainstorm and answer questions.

Dinesh [email protected]

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Morgan Lewis TCN presentation - seed and venture financing in three acts

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