#startup
Essential accounting and finance guidance for startup founders
Section 5 bans pre-filing offers, defined as any publicity conditioning the market. What founders may say before filing, while waiting, and after pricing.
ACV annualizes one contract, TCV totals its full term, ARR run-rates every customer — and revenue recognizes only as service is delivered.
A traditional IPO raises $100M+ but costs 5-7% in fees; direct listings and reverse mergers are faster and cheaper but raise no capital.
Broad-based weighted average reprices preferred stock partway to a down round's price; full ratchet resets it fully — founders absorb the difference.
Venture-track founders should pick Clerky's lifetime plan for SAFEs and options; Atlas wins on speed plus banking, Firstbase on non-US onboarding.
Freemium converts 2–5% of free users to paid; free trials yield 3x more payers per visitor — gate on success, meter free-tier costs, test a reverse trial.
Protective provisions veto company sales and new debt; pro rata, information rights, and side letters decide who buys, sees, and gets special terms.
A Magic Number above 1.0 means each S&M dollar buys more than a dollar of ARR — compute it with the one-quarter lag, then check the Default Alive test.
Post-money equals pre-money plus the investment — and which number a term sheet quotes decides whether a $1M check buys 20% or 25% of your startup.
Annual SaaS billing cuts churn far below monthly rates and pulls a year of cash forward — but prepayments are deferred revenue, not day-one income.
A bad-leaver exit can claw back vested founder shares at cost. Negotiate narrow cause, good-reason rights, and file IRS Section 83(b) in 30 days.
Tier 1 caps raises at $20M with state review and no audit; Tier 2 reaches $75M with preempted blue-sky laws, audited financials, and ongoing reports.
