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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

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. 4 * $4 million) and not $4 million.

Valuation 405
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7 Investor Term Sheet Demands Startups Need Not Fear

Startup Professionals Musings

Investors typically demand preferred stock, to give themselves certain voting and liquidation privileges over later shareholders. Preferred shares are not possible with a limited liability corporation (LLC), so expect to convert to a C-corp to get an equity investment. Type of stock assigned to the investor.

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The Truth About Convertible Debt at Startups and The Hidden Terms You Didn’t Understand

Both Sides of the Table

Because convertible debt deals often have both a ‘full ratchet’ and often have ‘multiple liquidation preferences’ “ Yup. Convertible Notes Also Can Have Multiple Liquidation Preferences. Convertible notes often have multiple liquidation preferences. That’s right.

Ratchet 354
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@altgate » Blog Archive » The 3X Liquidation Preference Is Back!

Altgate

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← Holiday Cards Year End Management Changes → The 3X Liquidation Preference Is Back! Let’s recap how expensive a 3x liquidation preference really is. Bookmark the permalink.

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How do the sample Series Seed financing documents differ from typical Series A financing documents?

Startup Company Lawyer

The primary rights in these documents, ranked in order of importance in my opinion are: Non-participating preferred liquidation preference. The liquidation preference would not apply in this situation, and any distribution to stockholders would trigger the dividend preference. Dividend preference.

Finance 70
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The Pre-money vs. Post-money Confusion With Convertible Notes

Feld Thoughts

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”.

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Term-sheets and Valuations: Thinking about Negotiations - Startups.

Tim Keane

.   At the financial level , and assuming a harvest of the investment in the company without the need for further financing, two terms stand out as driving economics: the dividend and the liquidation preference. Second a liquidation preference and a participation.   First , dividends.