1994 and Pay to Play - StartUpRoar

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1994

Pay to Play

Founders – Use Your Down Round To Clean Up Your Cap Table

Feld Thoughts

FEBRUARY 9, 2016

I started investing in 1994 and while there was some bumpiness in 1997 and again in 1999, the real pain happened between 2000 and 2005. I’ve seen every imaginable type of liquidation preference structure, pay-to-play dynamic, preferred return, ratchet, share/option bonus, option repricing, and carveout.

Cap Table

Cap Table Down Round Liquidation Preference Founder

The Silliness Of Recapping Seed Rounds

Feld Thoughts

JULY 14, 2015

It usually happens in a later round, when the company is in fact worth much less than the liquidation preference overhang and insiders use a pay-to-play and a low valuation to reset the preferences and the cap table. and the investors, who put up $1m in a convertible note, get 0.1%. Sure – it happens.

Recapitalization

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor

Founders – Use Your Down Round To Clean Up Your Cap Table

The Silliness Of Recapping Seed Rounds

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