Charles Rives Ventures

Here is how the loan works:

• A standard interest bearing loan will be made to a corporation, which we will help you establish if you do not already have one in place. CRV will not seek a personal guarantee and will not hold you personally responsible for repaying the loan.
• The loan converts into equity only if and when your company closes its next round of funding (typically a Series A round). If the company successfully raises its next round, in exchange for sharing the risk with the entrepreneur, CRV receives a discount on the conversion price when the loan is rolled into that next round. The discount will be a maximum of 25% (determined ratably at five percent per month, depending on how long it takes to close the financing, up to the maximum) off of the per share price.
  
  A simple example: if CRV loans your company $100,000 with a six percent interest rate, and six months later the company closed a Series A round, at that point the loan balance (with interest) would convert at a 25% discount (value = loan dollar amount plus interest / .75) into $137,333.33 worth of Series A stock. Given that seed funding amounts are typically very small compared to the amounts one might expect to raise in a Series A round, as the example illustrates, the aggregate discount amount, in this case $37K, is a tiny fraction of what tends to be a multimillion dollar Series A financing.
• In addition, CRV would like the opportunity to support the Series A financing and will have an option to invest equally with other new investors in the Series A equity funding. For example, if you raise a $3M Series A round, and the entrepreneur wanted 2 venture firms or investors, CRV would be allowed to contribute up to $1.5M of the round (e.g. $3M divided by 2). If the entrepreneur wanted 4 firms or investors, CRV would be allowed to contribute up to $750K of the round (e.g. $3M divided by 4). Whatever number of investors the entrepreneur wants, we will happily support the ability to split the investment equally among the investors.

Reward your advisors and partners

As part of the CRV QuickStart program, CRV appreciates that you want to appropriately reward the key people who helped you build the company. If the entrepreneur wants to do this and subject to applicable legal requirements, the corporation could issue to the following individuals/institutions a five-year warrant to purchase (exercisable at fair market value per share at the time of the Series A closing) shares of the company's common stock representing one third of one percentage point of the company's fully-diluted capitalization at the time of the Series A closing:

1. the person who introduced the deal to CRV;
2. the company's principal third-party advisor (e.g., a professor, a fellow entrepreneur, or a mentor); and
3. an institution selected by the company that supports its vision (e.g., a university, non-profit organization, industry group or other foundation).

CRV helps you achieve your Series A funding

At the end of the seed process, our goal is to lead your Series A round of funding, subject to final review and approval by the full CRV partnership. We will actively work with you to assist in making progress toward a formal first round of equity financing. To the extent your company holds board meetings during the seed phase, we will attend those meetings in an observer capacity to lend both strategic and tactical advice and assistance.

Through the CRV QuickStart program, we can help you hit the ground running and explore the fullest potential of your idea as quickly and efficiently as possible.