David Teten
JANUARY 19, 2021
When the company hits potholes, Flexible VC investors usually don’t have the nuclear options of firing management and/or doing a recapitalization. That said, Jonathan Bragdon, General Partner, Capacity Capital , points out that Flexible VC terms “twin” well with equity: providing less dilution while still providing investor assistance. .
blog.simeonov.com
FEBRUARY 22, 2010
The only way to remove their equity holding in the cap table is by buying them out or through a recapitalization of the company. In this case you have to consider whether they are common or preferred holders and, in the latter case, their anti-dilution protection, pay-to-play provisions and willingness to participate in the recap financing.
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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. So they recapitalize the company. Here’s the scenario. A company raises $1m of seed money from angels in a convertible note with a $6m cap.
abovethecrowd.com
APRIL 20, 2016
This severely heightens the risk of either running out of money or a complete recapitalization that wipes out previous shareholders (founder, employees, and investors alike). It will also minimize future dilution. Any investor asked to follow a dirty offering will look at the complexity of the previous offering and likely opt out.
www.paulgraham.com
APRIL 28, 2010
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. [ a big VC firm wants to invest in the startup after you, they maytry to make you take out your anti-dilution protections.
venturehacks.com
MARCH 21, 2008
If your company hasn’t raised a Series A, increase the advisor’s equity by roughly 30%-50% to account for dilution from seed investors, Series A investors, option pools, swimming pools, and the like. The company is acquired, recapitalized, or otherwise restructured and the advisors are no longer useful or desired.
Both Sides of the Table
MARCH 1, 2010
He was grateful since I stuck with my first company, BuildOnline, well beyond when others would have (since I had taken great dilution during the dot com burst.). He was grateful since I stuck with my first company, BuildOnline, well beyond when others would have (since I had taken great dilution during the dot com bust.).
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