Comments on: What is Class F common stock?

By: Is Your VC Founder Friendly? « Steve Blank

Is Your VC Founder Friendly? « Steve Blank — Tue, 15 Jun 2010 17:23:21 +0000

[...] finding the business model. There have been suggestions of a different class of stock for founders here and good general advice in VentureHacks [...]

By: sylvestor811

sylvestor811 — Tue, 20 Apr 2010 18:48:12 +0000

Hi

I want to know some facts from the VC Angle:
1. How will this change of accepting Class F stock affect VC's if they have such high voting right & board rights. What will be the role of a VC who has a board seat if the founders blindly keep passing all the bills just because they have more than 50% control at all times.
2. How can we have even play
3. I feel Class F is too founder friendly, how can we alter the voting power & board votes ratio to be in such a way that can have a level playing field
4. Understand that the CEO's are getting laid off with out reason. We could have a founder friendly clause saying that he will not be sacked for a period of time rather than making it so founder friendly
5. In a classic example where a VC invests $4MM of a $10MM company for 40% stakes & if the company gets sold for $100MM. How much will the VC make out of it if we go by considering the Class F stock

By: Yokum

Yokum — Wed, 03 Mar 2010 11:39:49 +0000

@StartupCEO – Class F and regular common stock (Class A) are acceptable in an S corp. Voting and control differences do not constitute a separate class for S corp purposes. An economic difference, like differences in liquidation preferences would constitute a separate class.

By: StartupCEO

StartupCEO — Thu, 25 Feb 2010 23:21:02 +0000

Yokum,

Can a Class F be created for an “S Corporation”? My understanding of S corps is that you can only have one class of stock, but I've read where you can have multiple classes of common as long as one does not have a liquidation preference over another? Our business may or may not go the VC route, so we're interested in the tax benefits of s corp now, and will covert to c if we decide to raise venture money.

By: Yokum

Yokum — Tue, 22 Sep 2009 22:22:27 +0000

@Anil – Theoretically, if issued on the same day, the Class F should be priced at higher than the Class A. The Class F is typically issued at some nominal price, like $0.0001 per share.

By: Yokum

Yokum — Tue, 22 Sep 2009 16:22:27 +0000

@Anil – Theoretically, if issued on the same day, the Class F should be priced at higher than the Class A. The Class F is typically issued at some nominal price, like $0.0001 per share.

By: Anil

Anil — Mon, 21 Sep 2009 15:03:38 +0000

AT the time of formation, how do you price Founder Class F Common Stock? Same as the $0.0001 per share that is typically the price paid by founders for common stock, or something higher? And, where we have Common F, ho wdo you price the Common A shares, $0.0001 per share?

By: Yokum

Yokum — Sun, 13 Sep 2009 01:39:26 +0000

@startup founder – the form of Class F certificate of incorporation is available on the TheFunded Founder Institute web site. You will need an experienced attorney to assist you as it is not a do it yourself project.

By: startup founder

startup founder — Wed, 09 Sep 2009 03:30:18 +0000

I'm planning to incorporate a c corp for my website venture. I'd like to use class F stock during incorporation. Can you tell me how I go about it? Where do I specify that my corporation uses class F stock?

Thanks!

By: Yokum

Yokum — Fri, 04 Sep 2009 05:14:47 +0000

@stuart – Most founders loan the money to the company.