Feld Thoughts

FEBRUARY 9, 2016

I’ve seen every imaginable type of liquidation preference structure, pay-to-play dynamic, preferred return, ratchet, share/option bonus, option repricing, and carveout. I suffered through the next financing after implementing a complex structure, or a sale of the company, or a liquidation.

Cap Table 70

Cap Table Down Round Liquidation Preference Founder 70

Startup Professionals Musings

JANUARY 27, 2012

Based on my experience, and the book “ Attracting Capital from Angels ” by Brian Hill and Dee Powers, here are some key clauses that any investors expect on the first term sheet for the investment you need: Set the price. The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.”

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Startup Company Lawyer

MARCH 14, 2010

In my experience, if a company is raising, say $1.0 The primary rights in these documents, ranked in order of importance in my opinion are: Non-participating preferred liquidation preference. Dividend preference. Liquidation preference. 2 common; 1 preferred. 2 common, 1 preferred.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Gust

OCTOBER 17, 2011

Based on my experience, and the book “ Attracting Capital from Angels ” by Brian Hill and Dee Powers, here are some key clauses that any investors expect on the first term sheet for the investment you need: Set the price. The price is the percent of ownership given to the investor, calculated as “investment/post-money valuation.”

Term Sheet 158

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 158

Both Sides of the Table

SEPTEMBER 6, 2010

We set our sites on our IPO price and then worked back to our current valuation and showed potential employees what we thought they could earn (with all legal caveats) if the company was successful. There’s a difference between companies wanting to hide valuations and investors doing so. I prefer percentages (e.g.

Stock Options 294

Stock Options Stock Valuation Liquidation Preference 294

www.mattbartus.com

DECEMBER 9, 2012

How to pump up your VC valuation. If you are a company that is fundraising, keep in mind that there are a few different levers you can pull to change the amount of dilution that the founders will experience. One possibility is to negotiate a higher valuation and offer warrants (i.e., Matt Bartus — February 9, 2010.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Both Sides of the Table

SEPTEMBER 28, 2013

The don’t understand VC liquidation preferences or multiple return expectations. But I’ve also had enough direct experience to know that what people want to know is at the highest level “is it going to all be ok or are we facing tough times?” Dilution / valuation. And yes, he did buy a house.

Startup 417

Startup Dilution San Diego Stock Options 417

www.readwriteweb.com

DECEMBER 29, 2011

This can be an intimidating experience so I've put together a list of five tips for raising a venture round. This includes things like how liquidation preferences impact future rounds and ultimate liquidity, to why VCs ask to expand an option pool before investing as part of their term sheet.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47

Both Sides of the Table

NOVEMBER 4, 2009

Let’s assume that the company raised it at a normal VC valuation, which means it gave up 33% of the company and thus $5 million / 33% = $15 million post-money valuation. BTW, this ignores liquidation preferences which actually mean you’ll earn less. OK, you would own 0.25% of the stock. you won the lottery).

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Professor VC

APRIL 1, 2010

One comment made by Jason was that angels tend to be less sensitive than VCs on valuation and can potentially make it difficult to get a venture financing done at acceptable valuation. We are typically looking at either smaller exits or require a lower valuation to get a reasonable step-up to a venture round.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

Scott Edward Walker

JULY 7, 2011

Finally, founders should watch-out for unusual redemption rights, such as a “MAC” redemption pursuant to which investors are given the right to redeem their shares if the company “experiences a material adverse change to its business, operations, financial position or prospects.” This is a non-starter.

Term Sheet 49

Term Sheet Redemption Venture Capital Preferred Stock 49

Hunter Walker

NOVEMBER 23, 2015

I was one of the founders of Upstartle, had the idea and wrote the first version of Writely (I was interested in experimenting with what was then called AJAX and some new browser capabilities around text editing). More recently I’ve written about some research on stock performance post IPO, and how our experience is fairly typical.

Engineer 48

Engineer Liquidation Preference AJAX IPO 48

Scott Edward Walker

AUGUST 31, 2011

They are often dealing with people with very limited or no business experience. At what valuation and on what terms? These people need help in defining and pursuing their business goals. How should the founders divide the initial stock ownership? Who should be on their board of directors? Which financing sources should they consider?

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

crowdSPRING Blog

MARCH 13, 2014

Does A Billion-Dollar Valuation Buy Employee Happiness? Good read for entrepreneurs & startup employees on liquidation preferences – crowdspring.co/1neVvzy. Secret Ingredients to an Unforgettable User Experience | 1stwebdesigner – crowdspring.co/1ncMMhy. ReadWrite – crowdspring.co/1ekm5xR.

Social Media 96

Social Media Small Business Design Media 96

thestartuplawyer.com

FEBRUARY 24, 2010

I wish I could say that my experience was limited to listening to my clients’ stories. Even so, I believe the negative experience can end up producing a better entrepreneur if he or she applies lessons learned to current and future startups. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

dondodge.typepad.com

JANUARY 15, 2011

The entrepreneur expects the company to be worth many times this valuation and so does the investor. The key is to have several VCs or investors competing for the deal to arrive at a "fair" valuation. So they will give you a pre-money valuation somewhere around the amount you raise. That is how much you should raise.

Equity 40

Equity Employee Dilution Valuation 40

K9 Ventures

OCTOBER 19, 2015

As I’ve pointed out in previous blog posts , one of the reasons the late stage investors are comfortable with investing at lofty valuation is because all their investments come with liquidation preferences. As Jack Welch from GE pointed out to John Chambers that every company must have a near death experience.

Venture Capital 48

Venture Capital Liquidation Preference Valuation Portfolio 48

Professor VC

JUNE 6, 2016

I can just picture Mr. Rogers saying "Children, can you say participating preferred stock with an uncapped 3x liquidation preference and a full ratchet?" Some are able to offer better terms (pro-rata rights, lower valuation caps) than an individual could get. Well, maybe so after watching his middle finger salute.

Syndicate 28

Syndicate Syndication Cap Table Ratchet 28

www.paulgraham.com

APRIL 28, 2010

When youhear people talking about a successful angel investor, theyre notsaying "He got a 4x liquidation preference." 2 ] When you negotiate terms with a startup, there are two numbers youcare about: how much money youre putting in, and the valuation ofthe company. The valuation determines how much stock you get.

Angel Investor 63

Angel Investor Syndicate Syndication Dilution 63

Austin Startup

APRIL 1, 2017

They’ll focus on high-level issues like valuation, liquidation preference, and board composition (# of seats), and then prematurely check out once a term sheet is signed. It’s experience. And, broadly speaking, that is correct. But the devil is in the details, and too many teams overlook extremely important details.

Term Sheet 48

Term Sheet Institutional Investors Technical Review Lead Investor 48

Up and Running

MARCH 29, 2017

See Also: How to Learn Programming and Launch Your App in 3 Months—with No Programming Experience. Experience and ambition make a good team. I hired an employee who had B2B SaaS marketing experience, and he worked on getting users while I worked on building new features that would convince them to stick around.

Term Sheet 60

Term Sheet Venture Capital Liquidation Preference Valuation 60