David Teten

AUGUST 21, 2019

Less or no dilution. 2) To sell their businesses when they want – early, mid term, or never.” . When you raise early stage VC, you can’t sell early because the VCs won’t agree to it. But you also can’t run the company forever, since investors need a liquidity event. Optionality.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Feld Thoughts

FEBRUARY 28, 2023

Conversion right: In Germany, there is generally no conversion right entitling the holder of preferred shares to convert them into common shares at any time. This may not seem like a big deal at first glance, but it has extensive implications under various aspects, such as the structure of the liquidation preference.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

VC Adventure

AUGUST 30, 2010

I think the answer to these questions are that 1) it’s not at all clear that this trend is as definitive as Graham suggests; 2) it’s a mixed bag for entrepreneurs (more positive in the short run, potentially negative in the long term); and 3) it’s clearly not a positive trend for early-stage investors. Conclusions?

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

K9 Ventures

MARCH 23, 2011

The founders’ interest is to maximize the valuation of the company at the time of a follow-on financing, thereby minimizing founder dilution. It is in essence equivalent to being a Liquidation Preference that is typically seen in a preferred equity financing. Where are you going? Is it in the right direction?

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Venture Chronicles

AUGUST 23, 2013

Furthermore, when it comes to planning the typical startup has the additional dynamic of being not well equipped to push back against investors who have an expectation of growth rates in the early stages that well exceed 100%. well a lot of things can derail the best laid plans.

Management 66

Management Startup Liquidation Preference Dilution 66

dondodge.typepad.com

JANUARY 15, 2011

Entrepreneurs face some pretty tough questions at a very early stage. How much equity should I grant to early employees? The second and third rounds of funding take additional shares of equity and dilute existing investors and founders. Dont worry about giving up too much equity at an early stage.

Equity 40

Equity Employee Dilution Valuation 40

Gust

MAY 24, 2012

By contrast, venture capital and angel investments normally take the form of Preferred Stock with rights and preferences set forth in the company’s Certificate of Incorporation and other governance documents.

IPO 159

IPO Equity Common Stock Stock 159

Austin Startup

AUGUST 1, 2017

First, investors will sometimes be willing to take a higher valuation if it means getting a heavier liquidation preference. Should you accept a 3x liquidation preference with a $15MM valuation instead of a 1x preference at a $8MM valuation? If you’re confident you’ll get a huge exit, maybe.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48

Startup Company Lawyer

JANUARY 9, 2011

Convertible debt with a price cap seems to be the preferred structure for early-stage financings. Over the last 12 months, I’ve noticed a trend where early-stage startup companies raise seed financings of between $250K and $1M using a convertible note with a price cap.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

Feld Thoughts

JULY 14, 2015

Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. Here’s the scenario. A company raises $1m of seed money from angels in a convertible note with a $6m cap. So they recapitalize the company. Sure – it happens.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

abovethecrowd.com

APRIL 20, 2016

Never in the history of venture capital have early stage startups had access to so much capital. It will also minimize future dilution. I get that you want to grow and I want you to grow, but let’s internally finance that growth by spending gross margin dollars rather than new dilutive dollars of equity.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

www.paulgraham.com

APRIL 28, 2010

When youhear people talking about a successful angel investor, theyre notsaying "He got a 4x liquidation preference." Dilution is normal. They cant dilute you without diluting themselves justas much. And they wont dilute themselves unless they end up net ahead. So its your choicewhether you get diluted. [

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63

Life Beyond Code

SEPTEMBER 27, 2011

And today, we have a group of early adopter premium members who are making good use of the program. When we were looking to talk to investors, Sramana introduced us to multiple investors and acted as an advisor helping us to navigate complex term sheet clauses like tranche financing and liquidation preferences.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116