Liquidation Preference Pay to Play Reputation Valuation 
Scott Edward Walker
SEPTEMBER 14, 2011
First (and needless to say), founders should do extensive due diligence on the investors prior to executing a term sheet to ensure that they are dealing with trustworthy and reputable investors (both the firms and the individuals involved), and that there’s no history of them walking away from deals.
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. The term sheet converts all the convertible debt into a post-money valuation of $100, essentially making the convertible debt worthless. Sure – it happens.
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