Distribution, Pay to Play, Pre-Money Valuation and Sales

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Distribution

Pay to Play

Pre-Money Valuation

Sales

Term-sheets and Valuations: Thinking about Negotiations - Startups.

Tim Keane

JANUARY 12, 2010

It also assumes the entire value of the investment is captured for investors at a sale of the company in the time specified in the term-sheet. On the last line on page two of the workbook, you see the resulting returns to the entrepreneur with a variety of terms and valuations and assumptions. Let’s start at the end.

Term Sheet

Term Sheet Valuation Dividend Liquidation Preference

No Mess (Too Much Liquidation Preference)

ithacaVC

DECEMBER 14, 2011

One final background point, a “liquidation event” is a sale of the company and typically NOT an IPO. With respect to the Series C round, let’s assume that the pre-money valuation is $12 million and that the VC investing is going to put in $4mm (and to keep things simple, let’s have only 1 Series C investor).

Liquidation Preference

Liquidation Preference LP Preferred Stock Liquidity Event

StartUpRoar

Term-sheets and Valuations: Thinking about Negotiations - Startups.

No Mess (Too Much Liquidation Preference)

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