Startup Company Lawyer - Latest Comments in What is Class F common stock?

Re: What is Class F common stock?

Yokum — Thu, 09 Dec 2010 01:31:55 -0000

@Francis - Class F should be implemented when the company is incorporated and before shares are issued.

Re: What is Class F common stock?

Francis — Fri, 22 Oct 2010 06:46:44 -0000

Is this an all, or nothing, move? Do all founders shares automatically become Class F shares, regardless of who they are given to? Or, can the 'founder' just convert their personal shares to Class F shares?

Re: What is Class F common stock?

Sand — Tue, 28 Sep 2010 21:23:12 -0000

Are series F benefits somewhat oversold because whoever comes up with real money is going to cram down whatever terms they want --- likely gutting those benefits?
The Googles of the world can resist that, the rest of us can't without rolling the dice on continued existence.

Re: What is Class F common stock?

sylvestor811 — Tue, 20 Apr 2010 09:48:12 -0000

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

Re: What is Class F common stock?

Yokum — Wed, 03 Mar 2010 01:39:49 -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.

Re: What is Class F common stock?

StartupCEO — Thu, 25 Feb 2010 13:21:02 -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.

Re: What is Class F common stock?

Yokum — Tue, 22 Sep 2009 13:22:27 -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.

Re: What is Class F common stock?

Anil — Mon, 21 Sep 2009 12:03:38 -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?

Re: What is Class F common stock?

Yokum — Sat, 12 Sep 2009 22:39:26 -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.

Re: What is Class F common stock?

startup founder — Wed, 09 Sep 2009 00:30:18 -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!

Re: What is Class F common stock?

Yokum — Fri, 04 Sep 2009 02:14:47 -0000

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

Re: What is Class F common stock?

stuarteichert — Tue, 01 Sep 2009 19:05:07 -0000

Yokum,
Let's say the founders capitalize their C corp by buying their class F common stock, but then 6-8 months later the company needs more money to continue operating. Should the founders simply loan the additional capital needed to the company via a promissory note (at reasonable interest, etc., etc.) or should they be buying additional class F common stock from the company? My gut says promissory note, but figured I should ask.

Re: What is Class F common stock?

Yokum — Sun, 19 Jul 2009 01:54:17 -0000

@Ken - Don't understand the question. Class F will generally be issued at incorporation. Class F can be converted to Class A, but not vice versa.

Re: What is Class F common stock?

Ken Brabender — Fri, 10 Jul 2009 16:47:25 -0000

Why would a company convert my Class A stocks to Class F stocks? Is there a benifit to me?

Re: What is Class F common stock?

Mark MacLeod — Mon, 27 Apr 2009 06:48:11 -0000

These terms could survive an angel round perhaps since angels and founders are aligned when it comes to the dilution they can experience from VCs over the life cycle. Still, I don't see any VC taking these. And I think almost any startup that uses them and approaches VCs will see the VCs walk away (even if they like everything else about the deal)

Re: What is Class F common stock?

Yokum — Thu, 23 Apr 2009 19:48:17 -0000

@Michael - Entirely different concept. Series FF enable founders to sell their stock in a venture financing. Class F stock allows founders to maintain control of a company.

Re: What is Class F common stock?

Michael F. Martin — Thu, 23 Apr 2009 16:55:34 -0000

Any comment on how F is different from FF?