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

Both Sides of the Table

APRIL 14, 2010

That means that the likely have a minimum of $15 million in liquidation preferences. It will usually be higher because the liquidation preference has a dividend so if the deal is long in the tooth assume that the liquidation preference might be $20-22 million. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

Both Sides of the Table

MAY 13, 2013

If the money comes from professional investors it usually has a “liquidation preference” meaning that their money comes out before the founders or common stock. (If That’s why liquidation preferences exist – downside protection. Almost certainly the startup would have raised some capital.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Both Sides of the Table

MARCH 1, 2016

In bad markets, they can be wiped out by recaps and liquidation preferences unless they save enough reserves to protect their positions. Another big area of concern expressed by LPs is that some seed funds may get “squeezed” in both good scenarios and bad. The data itself bears out some of these fears.

Venture Capital 150

Venture Capital LP Silicon Valley Marketing 150

Both Sides of the Table

FEBRUARY 15, 2016

So if they’re in the mindset that they’re better off getting their $20 million back versus risking more capital then they may prefer just to sell your company for whatever you can get for it. Even if you sold for $20 million they’d be thinking “I have senior liquidation preference so I get my money back.”).

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Both Sides of the Table

JANUARY 21, 2010

You need to know how liquidations preferences work. You cannot just say these clauses are “legalese&# and I’ll let my lawyer figure them out. You need to own your legal agreements. You need to know how “tag along&# rights could potentially screw you. That’s why I love VentureHacks.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Both Sides of the Table

NOVEMBER 4, 2009

BTW, this ignores liquidation preferences which actually mean you’ll earn less. In California that averages around 42.5% so in my state after tax you’d make an extra $18,000 / year and that’s in a positive scenario! So let’s go CRAZY! You get 1%, you sell for $150 million and it’s in 3 years (e.g.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Both Sides of the Table

SEPTEMBER 28, 2013

The don’t understand VC liquidation preferences or multiple return expectations. You take the meeting but you’re not really pursuing it. But staff can’t make the delineation in their heads. They see the dollar signs and the victory.

Startup 417

Startup Dilution San Diego Stock Options 417

Both Sides of the Table

SEPTEMBER 6, 2010

That said, don’t complicate the topic – If you’re the founder of a company you likely know a lot about things like Liquidation Preferences and how they affect value allocations when the company is sold.

Stock Options 294

Stock Options Stock Valuation Liquidation Preference 294

Both Sides of the Table

SEPTEMBER 2, 2009

I took money with a 3x participating preferred liquidation preference with 8% compounded interest annually. Coupled with my participating preferred from 1999 and 2000 I had more than $55 million of liquidation preferences. In my first company I had to raise money in April 2001 or die.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

Both Sides of the Table

JULY 19, 2011

For one, due to the way liquidation preference work sometimes they have “flat spots&# which means that they might earn the exact same amount from a $40 million sale as they would from a $50 million sale. But you want to be the person negotiating your deal. What might the VC do against your interest?

Term Sheet 319

Term Sheet PR Liquidation Preference Stock Options 319

Both Sides of the Table

SEPTEMBER 8, 2012

It has both a “full rachet” and “multiple liquidation preferences.” They share in liquidation preferences pari passu and they vote as a single class. If you do a capped note it’s bad for the entrepreneur. I’m not sure why people don’t see that. ” I wrote about it here.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294

Both Sides of the Table

MARCH 3, 2013

We talked about Liquidation Preference, Voting Rights, and all of the other valuable terms crowd-funding investors don’t understand. Neither does Clayton. Unsophisticated money pours into a system as it did in the 90′s through AIM, Neur Markt, Nouveau Marche, etc and burned many investors.

Bankruptcy 403

Bankruptcy Offshore Liquidation Preference Balance Sheet 403

Both Sides of the Table

JUNE 14, 2010

Having raised too much money at my first company only to be buried under huge liquidation preferences and a huge board with divergent interests I have a bias for smaller funding rounds and capital efficiency. &# And I always try to put that into the mix when I’m looking at how they think about the opportunity at hand.

Liquidation Preference 343

Liquidation Preference Chicago Operations Partner 343

Both Sides of the Table

FEBRUARY 14, 2016

Or down rounds might favor earlier-stage investors because the liquidation preferences of later stage investors get reduced. Plus, down rounds trigger anti-dilution provisions. And down rounds might favor later-stage investors over earlier-stage investors who get wiped out.

Valuation 150

Valuation Down Round Startup Later Stage 150