Both Sides of the Table

JULY 22, 2010

Things like “ participating preferred stock &# in legalese unsurprisingly never actually call out, “hey, this is the participating preferred language.&# We got a3x participating liquidation preference with interest (not participating with a 3x cap, but 3x participating. I turned them down.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

SoCal CTO

SEPTEMBER 27, 2011

For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula. For example, suppose you're just two founders and you want to hire an additional hacker who's so good you feel he'll increase the average outcome of the whole company by 20%. n = (1.2 - 1)/1.2 =.167. and we have 11.1%

Early Stage 391

Early Stage Equity CTO Hire Sweat Equity 391

Both Sides of the Table

SEPTEMBER 5, 2012

Because convertible debt deals often have both a ‘full ratchet’ and often have ‘multiple liquidation preferences’ “ Yup. Convertible Notes Also Can Have Multiple Liquidation Preferences. Convertible notes often have multiple liquidation preferences. That’s right.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

ithacaVC

DECEMBER 13, 2013

There are many reasons for this, but fundamentally, it is impossible to calculate a share price for the investment round unless you have complete agreement on how many shares are outstanding pre-money. The share price is calculated by taking the pre-money valuation and dividing it by the number of shares outstanding pre-money.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

www.mattbartus.com

DECEMBER 9, 2012

Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed. Take a look at the numbers: Pre-Money. One possibility is to negotiate a higher valuation and offer warrants (i.e., Post-Money. Option Pool.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

thestartuplawyer.com

FEBRUARY 24, 2010

Who must be a co founder and who can remain a hired principal? When I find, and hire on options, the three perfect CEs/directors must I consider them co founders and treat them accordingly? Who must be a co founder and who can remain a hired principal? He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40