Agile VC

APRIL 17, 2011

In 2010 I deconstructed the filings for GameFly and Quinstreet. GameFly filed in 2010 and remains in registration, though 2011 has seen a positive start for VC-backed IPOs with 14 in Q1 2011. Filing Date: initial S-1 filed Nov 17, 2010 , updated March 9, 2011. Financial Snapshot: 2010 Revenue: $170 million.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Startup Company Lawyer

AUGUST 31, 2012

Paul Graham sparked some commentary by declaring in a tweet in August 2010 that “Convertible notes have won. ” As a result, Ted introduced the Series Seed preferred stock documents as an alternative to convertible debt for early stage investments. Why convertible equity is better than preferred stock.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

ReadWriteStart

APRIL 7, 2011

The survey includes responses from 52 Internet, digital media, and software companies that raised money in the Silicon Valley and Seattle in 2010. The majority of financings was structured as preferred stock (69%), as opposed to convertible note financings (31%), and the vast majority of those (83%) had their conversion price capped.

Preferred Stock 115

Preferred Stock Silicon Valley Seed Stage Venture Capital 115

Scott Edward Walker

APRIL 22, 2012

(ii) why are convertible notes issued instead of shares of common or preferred stock? This part 2 will address the economics of a convertible note seed financing and the three key economic terms: (i) the conversion discount, (ii) the conversion valuation cap and (iii) the interest rate. What Is a Conversion Discount?

Pre-Money Valuation 72

Pre-Money Valuation Finance Liquidation Preference Founder 72

Scott Edward Walker

MAY 15, 2012

What Happens If a Startup is Acquired Prior to the Note’s Conversion to Shares of Preferred Stock? As discussed in part 1 , in the context of a seed financing, a convertible note is a loan that typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing.

Finance 64

Finance Founder Accredited Investor Preferred Stock 64

Tim Keane

JANUARY 12, 2010

Bottom Up Market Sizing » January 12, 2010. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues. Term-sheets for preferred stock offerings are designed to protect the investor in case things don’t go as well as planned.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

APRIL 14, 2010

It is 2010. That means that they likely raised money at a particularly high price relative to 2010 prices. In straight preferences the investors only get this money in a “downside&# scenario as protection that they get their money back if your company isn’t successful. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289