ABSTRACT
There are a number of securities that can be used with a startup company. At various points, a company may choose to issue equity or debt securities. A security is simply a fungible financial instrument that represents value. The entity issuing a security is called the issuer. While issuing securities in company may seem like a very simple concept, even successful companies have found themselves forced to clean up problems due to improper stock issuances. Convertible preferred stock represents a subset of preferred stock providing the owner the right to convert the preferred shares into common stock. This subset of preferred stock is the typical equity security issued to venture capital firms and other private equity investors. In general, companies should be aware that both federal and state laws regulate the offer and sale of securities, including stock, options, and warrants.
