1. Financing Workshop for Entrepreneurs Presented to the Stanford GSB Entrepreneur Club

2. Types of Financing Bootstrap Bridge Loan Angel Financing VC Financing Corporate Investor

3. Bridge Financing Promissory Note Interest Conversion Term Warrants Defaults Handouts: Form of Bridge Financing Term Sheet

4. Angel Financing Usually less than $1 million Terms Number of investors Finding Angels

5. VC Financing Usually > $1 million Often more than one investor Terms

6. Anatomy of a Term Sheet Valuation –How to determine pre-money valuation and per share price –Option pools Milestones Dividends Liquidation preferences Conversion Protective provisions Anti-dilution

7. Anatomy of a Term Sheet (con’t) Right to participate in future rounds Pay-to-play Redemption Drag along Registration rights Co-Sale agreement No shop Handouts –Form of Term Sheet

8. Board Members CEO Founder Series A Director Series B Director Outside Director

9. Sample Dilution

14. Corporate Investor Higher Valuation Less day-to-day involvement Conflicts with customers Conflicts on exit

15. Three Things to Remember Determine the type of financing that is right for your company Understand the terms of the financing Balance dilution with time to market

16. Allison Leopold Tilley Tel: 650-233-4518 Email: allison@pillsburywinthrop.com Allison Leopold Tilley focuses on the representation of technology companies in securities and venture capital transactions, including mergers and acquisitions, private placements, public offerings, venture funds and joint ventures. She has significant experience representing acquirers and target companies. Ms. Leopold Tilley is co-head of the Firm’s Corporate Securities and Technology Section and co-head of the Southeast Asia Specialty Team. Ms. Leopold Tilley has represented a wide variety of companies ranging from start-ups and emerging growth companies to Fortune 500 companies, private equity firms, venture capital firms and other clients.

17. Office Locations Pillsbury Winthrop - 2005 New York San Francisco Sacramento Silicon Valley Los Angeles Century City Orange County San Diego Carmel Valley Houston Northern Virginia Washington, D.C. Stamford, CT Sydney Tokyo London

18. Doc #60392513v1