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.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Lightspeed Venture Partners

OCTOBER 7, 2012

Week three’s breakdown covered topics like how hard momentum is to turn around, and how participating preferred stock works. As Cuban pointed out, this is a “down round” Zomm is seeking $2M for 10% of the company, implying an $18M pre money valuation today. BACK 9 DIPS.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

ithacaVC

APRIL 25, 2014

For example, cell E2 is the spot to put in the negotiated pre-money valuation. The model includes a simple waterfall analysis using both participating and non-participating preferred (see line 44 and then columns M and O). Play with the investment numbers (increase them in column L).

Cap Table 79

Cap Table Preferred Stock Pre-Money Valuation Liquidation Preference 79

Lightspeed Venture Partners

OCTOBER 1, 2012

pre money valuation). Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation. The company came back and offered him 20% of the company for the $200k (an $800k pre money valuation). They were seeking $200k for 10% of the company (a $1.8M

Pre-Money Valuation 152

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 152

The Startup Lawyer

JANUARY 10, 2012

The amount of the liquidation preference is usually expressed as a multiple, with the most common liquidation preference being “1X non-participating.” Thus, if you see greater than a 1x preference and/or a ‘participating’ preference attached, know that your investor is just negotiating on price.

Liquidation Preference 73

Liquidation Preference Pre-Money Valuation Participating Preferred Preferred Stock 73

ithacaVC

DECEMBER 14, 2011

Sometimes, after getting back the LP, the preferred holder then converts to common and gets its prorata share of proceeds left after all LP has been paid (this is called participating preferred). Therefore, the new Series C investor would own 25% of the company post money ($4mm/($12mm + $4mm)). It might be.

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Both Sides of the Table

APRIL 14, 2010

Once you cross the threshold where their percentage ownership would be worth more than the value of their preference they “convert&# their preferred stock into common stock and take their proceeds pari passu (along side and on the same terms as you) with the common stock holder. But pass they will. Brain damage. Reputation.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289