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. I’ve been writing up reviews of this season’s Shark Tank pitches from a silicon valley VCs perspective. This time I’ll break down week four of this season. BACK 9 DIPS.

Technical Review 110

Technical Review Technical Cofounder Valuation Pre-Money Valuation 110

Scott Edward Walker

JUNE 9, 2019

For example, if an investor owns 20% of the equity of a startup on a fully-diluted basis following the closing of a Series A round, it will have the right to purchase 20% of the shares of the preferred stock issued in the subsequent Series B round. The post WHAT ARE SUPER PRO RATA RIGHTS?

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

The Startup Lawyer

JANUARY 10, 2012

In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. A liquidation preference is the amount that must be paid to a preferred stock holder before any sale proceeds may be paid to the holders of common stock (i.e., founders, option holders, etc.).

Liquidation Preference 73

Liquidation Preference Pre-Money Valuation Participating Preferred Preferred Stock 73

Both Sides of the Table

APRIL 14, 2010

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. Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

The Startup Lawyer

JULY 13, 2011

The deal documents called the preferred stock “Series Seed&# shares but after opening up the documents I quickly realized the deal terms were NOT the same as those in the well-known Series Seed document set. Ultimately, the deal document set was nothing like the well-known Series Seed set.

Preferred Stock 68

Preferred Stock Liquidation Preference Participating Preferred Stock 68

ithacaVC

DECEMBER 14, 2011

As most of you probably know, LP is one of the fundamental economic attributes of preferred stock that preferred shareholders enjoy. Yes, it is possible to issue preferred stock without liquidation preference, but that is rarely done.

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Berkonomics

OCTOBER 1, 2015

Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. Further, preferred stock holders can be recipient of accrued dividends in a sale or liquidation.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Lightspeed Venture Partners

OCTOBER 1, 2012

These are typically called “ participating preferred ” structures, and are quite uncommon in West Coast VC deals these days, although they were once more common a couple of decades ago, and are still seen in some East Coast deals. In most investments, the investor gets straight preferred stock.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Scott Edward Walker

APRIL 9, 2012

ii) why are convertible notes issued instead of shares of common or preferred stock? In the context of a seed financing, the debt typically automatically converts into shares of preferred stock upon the closing of a Series A round of financing. Why Can’t a Startup Issue Shares of Common Stock to Investors?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

ithacaVC

NOVEMBER 18, 2011

get both the carve out amount and the equity value; I guess double dipping is only for VCs that have participating preferred stock ). This is to make sure that the executive does not double dip (i.e., I recently was discussing a management carve out plan with another board member.

Management 49

Management Preferred Stock Participating Preferred Equity 49

Professor VC

JULY 25, 2013

In investment parlance, it strictly means that new classes of stock have equal rights with prior classes in terms of liquidation preference, voting rights, etc. Their response was that we should be happy they didn''t ask for a participating preference on top of the seniority.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

www.payne.org

SEPTEMBER 22, 2011

2 Stock Classes: Common and Preferred. 5 Stock vs Options. 6 Founders / Restricted Stock. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. Startup Equity For Employees.

Equity 56

Equity Employee Vesting Preferred Stock 56

Feld Thoughts

FEBRUARY 28, 2023

In the USA, the conversion right ensures that holders of preferred shares are not disadvantaged compared to holders of common shares; in Germany, this legal consequence must result directly from the structure of the preferred shares. While there was a major law reform in 2021, the regulations are still inadequate.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

Startup Company Lawyer

FEBRUARY 21, 2010

I was speaking at an event last month to a group of CEOs and was surprised by the number of CEOs that were worried about the value of their common stock in a M&A transaction. Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless.

Retention 31

Retention Liquidation Preference Employee Common Stock 31

thinkspace.com

SEPTEMBER 7, 2012

Consider the stock exchange, knowing something that will effect the price of a stock before it is well known allows you to make the right move with the stock. You’d have to look at your stock options contract. Which triggers are very common when someone want to sell a few stock? [link] Harrison Rose.

Equity 62

Equity Employee Founder CTO Hire 62

ConversionXL

APRIL 23, 2013

Cheesy stock photos. The researchers informed half of the participants that natural chickens were healthy but less tasty, and genetically engineered chickens were tasty, but less healthy. Overwhelmingly, both halves of participants preferred the nice plump chicken, but their reasoning was different. No one gives a damn!

Web 134

Web Design Denmark Green 134

Scott Edward Walker

NOVEMBER 26, 2017

For example, one investor may propose Series Seed Preferred Stock and another investor may agree to a SAFE ; or, in a larger financing, one investor may be pushing hard for participating preferred and a 25% option pool and another investor may agree to the same valuation, but straight preferred and a smaller pool.

Term Sheet 63

Term Sheet San Francisco Founder Investment Bankers 63

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?" Well, maybe so after watching his middle finger salute.

Syndicate 28

Syndicate Syndication Cap Table Ratchet 28

ConversionXL

JULY 12, 2017

In addition, the same study found that 100% of participants preferred sites with sticky navigation bars, despite usually not knowing why (that’s all of the participants – crazy). Same goes for Amazon (or any ecommerce site) concerning product stock: Image Source. Don’t fake scarcity.

eCommerce 100

eCommerce Mobile Conversion Design 100

ConversionXL

JULY 12, 2017

In addition, the same study found that 100% of participants preferred sites with sticky navigation bars, despite usually not knowing why (that’s all of the participants – crazy). Same goes for Amazon (or any ecommerce site) concerning product stock: Image Source. Don’t fake scarcity.

eCommerce 95

eCommerce Mobile Conversion Design 95