Both Sides of the Table

DECEMBER 11, 2022

2001–2007: THE BUILDING YEARS The dot com bubble had burst. If they are private we still have fig leaves that cover us because some rounds might raise debt vs. equity or might fund with terms like multiple liquidation preferences or full-ratchets or convertible notes with caps. Until we weren’t. The tide has gone out.

Valuation 466

Valuation San Francisco Ratchet Liquidation Preference 466

Both Sides of the Table

JULY 22, 2010

Due to competitive markets we ended up with a pretty good term sheet until we needed to raise money in April 2001 and then we got completely screwed. Term Sheet Overview : The second most important economic term in the term sheet other than price is “liquidation preference.&# Those were the dog days of entrepreneurship.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. At an accelerator …. I see that all the time.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

genylabs.typepad.com

SEPTEMBER 24, 2011

where your stock sits in the liquidity preference stack. what rights and preferences the founders and the other investors have. The best start-up I ever invested in went bankrupt in 2001. what kind of stock you are getting. what your rights are. there is a real good chance your stock is not going to be worth much.

Equity 40

Equity Technical Review San Jose Stock 40

Both Sides of the Table

SEPTEMBER 2, 2009

In my first company I had to raise money in April 2001 or die. I took money with a 3x participating preferred liquidation preference with 8% compounded interest annually. Coupled with my participating preferred from 1999 and 2000 I had more than $55 million of liquidation preferences.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

Startup Company Lawyer

FEBRUARY 21, 2010

Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless. If you can’t figure this out yourself, you should probably build a liquidation preference spreadsheet to model how liquidation preferences work depending on M&A transaction value.

Retention 31

Retention Liquidation Preference Employee Common Stock 31