Conversion, Information Rights and Liquidation Preference

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Conversion

Information Rights

Liquidation Preference

What are the terms of Yuri Milner/SV Angel’s Start Fund $150K investment into Y Combinator companies?

Startup Company Lawyer

JANUARY 31, 2011

Automatic conversion: on a $1M equity financing with no conversion discount and no price cap , provided that the transaction documents provide for a right to purchase a pro rata share of future financings. (I Optional equity conversion: on other equity financings with no conversion discount and no price cap.

Preferred Stock

Preferred Stock Liquidation Preference IPO Common Stock

Thoughts on Convertible Notes

K9 Ventures

MARCH 23, 2011

The typical fix for this problem is to put in a cap in the note for the pre-money price for conversion. Before the era of capped notes, entrepreneurs preferred to do notes because the note essentially deferred the valuation of the company. Notes may have fewer rights associated with them, but they come with one big hammer.

Pre-Money Valuation

Pre-Money Valuation Valuation Equity Liquidation Preference

StartUpRoar

What are the terms of Yuri Milner/SV Angel’s Start Fund $150K investment into Y Combinator companies?

Thoughts on Convertible Notes

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