San Jose Contract Attorneys & Lawyers

What is a Most Favored Nation Clause?

Most favored nation startups are new companies that have a most favored nation or MFN clause in agreements with investors. This clause keeps later investors from getting better terms than the first investors, and it's completely different from the clause that involves countries. Most favored nation clauses are terms in many convertible notes. Some clauses make sure all parties in a contract get equal terms. MFNs usually last until the next round of financing, also called an equity round, starts.

Convertible Notes: What Are They?

Convertible notes are loans from investors that convert into equity or stocks when the company reaches prenegotiated mi

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LLCs and Corporations: What are They?

Corporations and limited liability companies (LLCs) are two legal entity structures available in the U.S.  If you're involved in a startup, these are two of the entity structures you can choose from.  They operate differently and are taxed differently, but both provide protection for your personal assets if the company faces financial difficulty and both can add increased credibility with customers.

Other company entity options include forming as a

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Debt Financing: What Is it?

Debt financing is when a company raises money by taking out a loan and then repays that loan over time with interest. This is also known as borrowing on credit. It can come from selling bonds, bills, or notes to lending institutions, or from private investors who are not looking to receive equity in your business.

It's good to be aware of the fact that banks often shy away from small businesses that are experiencing rapid sales growth, a temporary decline or a seasonal slump. They are not completely stable.

Debt Financing Versus Equity Financing

Debt financing is a loan that must be repaid, while equity financing is an investment of money in exchange for a stake in

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