Austin Startup

AUGUST 1, 2017

Large funds write larger checks because they lack the mental/resource bandwidth to actively manage a portfolio of smaller investments. First, investors will sometimes be willing to take a higher valuation if it means getting a heavier liquidation preference. Most individual VCs can only support about 7–10 companies at a time.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48

Feld Thoughts

JULY 14, 2015

It usually happens in a later round, when the company is in fact worth much less than the liquidation preference overhang and insiders use a pay-to-play and a low valuation to reset the preferences and the cap table. It’s not pretty, but it happens.

Recapitalization 70

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

Professor VC

APRIL 1, 2010

I had a discussi on with another angel investor a few months ago and he was bragging about the deal he just struck that included a 3X participating liquidation preference. This will both reduce the number of angel investors and make it more difficult to syndicate across stage lines. The old Keep It Simple Stupid Principle.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

www.paulgraham.com

APRIL 28, 2010

When youhear people talking about a successful angel investor, theyre notsaying "He got a 4x liquidation preference." Mechanics Angel investors often syndicate deals, which means they join togetherto invest on the same terms. In a syndicate there is usually a"lead" investor who negotiates the terms with the startup.

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63