Berkonomics

MAY 22, 2014

Like most angel investors, I have preferences for the terms and conditions of investment and intend to negotiate with entrepreneurs on those terms, such as valuation, company structure, the makeup of the board of directors, liquidation preferences and others. Email readers, continue here.]

Early Stage 79

Early Stage Accredited Investor SEC Private Placement 79

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. Many buying companies price these deals on the basis of $1 million per engineer on the team for an early-stage deal. has now employed the same strategy.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Both Sides of the Table

SEPTEMBER 5, 2012

Because convertible debt deals often have both a ‘full ratchet’ and often have ‘multiple liquidation preferences’ “ Yup. You rarely find full ratchets in early-stage deals any more. Convertible Notes Also Can Have Multiple Liquidation Preferences. That’s right.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

MARCH 1, 2016

In bad markets, they can be wiped out by recaps and liquidation preferences unless they save enough reserves to protect their positions. Of course, this raises a host of questions about conflicts of interest, valuations, and whether early-stage investors are well-suited to invest in later-stage deals.

Venture Capital 150

Venture Capital LP Silicon Valley Marketing 150

Both Sides of the Table

FEBRUARY 15, 2016

So if they’re in the mindset that they’re better off getting their $20 million back versus risking more capital then they may prefer just to sell your company for whatever you can get for it. Even if you sold for $20 million they’d be thinking “I have senior liquidation preference so I get my money back.”).

Burn Rate 150

Burn Rate Cap Table Valuation Software Review 150

Berkonomics

JULY 23, 2020

Does the board declare dividends upon the preferred stock invested in order to increase the amount paid out to the preferred – at the expense of the common – shareholders, which usually includes the founder(s)? Can you protect the common shareholders?

Delaware 62

Delaware Liquidation Preference Preferred Stock Early Stage 62

Startup Company Lawyer

MARCH 14, 2010

In addition, I think that a “peace treaty&# between early-stage investors and startup companies on standard terms (at least at a term sheet level) is a step in the right direction. The primary rights in these documents, ranked in order of importance in my opinion are: Non-participating preferred liquidation preference.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Professionals Musings

FEBRUARY 3, 2018

These normally include what percentage of the company the investor now owns, how and when tranches of money will be delivered, and even how and when you can sell your own shares (liquidation preferences). Investors will expect at least one seat on the board, and expect a board report from you each month on key items.

Term Sheet 140

Term Sheet Advisory Board Liquidation Preference Portfolio 140

K9 Ventures

JUNE 5, 2015

I still wanted K9 to be the first institutional money in a company and work with “frighteningly early-stage” companies. Your early stage investment portfolio may no longer really be early stage. Over the next few months, I could see more and more signals that this shift was really happening.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Up and Running

AUGUST 17, 2015

C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on). During the early stages of the process, they launched a catering business and were able to cater several business school events, all the while refining their menu and getting firsthand experience test driving their concept.

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

Startup Professionals Musings

JULY 3, 2014

These normally include what percentage of the company the investor now owns, how and when tranches of money will be delivered, and even how and when you can sell your own shares (liquidation preferences). Investors will expect at least one seat on the board, and expect a board report from you each month on key items.

Term Sheet 237

Term Sheet Advisory Board Liquidation Preference Startup 237

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. But how do I offer cheaper prices to early investors?”

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

David Teten

AUGUST 21, 2019

2) To sell their businesses when they want – early, mid term, or never.” . When you raise early stage VC, you can’t sell early because the VCs won’t agree to it. But you also can’t run the company forever, since investors need a liquidity event. Works for early-stage companies.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Feld Thoughts

JUNE 2, 2015

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.”.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

Startup Professionals Musings

AUGUST 16, 2015

These normally include what percentage of the company the investor now owns, how and when tranches of money will be delivered, and even how and when you can sell your own shares (liquidation preferences). Investors will expect at least one seat on the board, and expect a board report from you each month on key items.

Term Sheet 120

Term Sheet Advisory Board Liquidation Preference Angel Investor 120

Altgate

OCTOBER 8, 2009

Raising Capital: 5 Reasons Convertible Debt Sucks HOT The Collapse of the VC Ecosystem & What It Will Look Like Post Recovery 10 Tips On Negotiating With VCs Dating…er…Fundraising Etiquette The Science & Art of Term Sheet Negotiation HOT How Liquidation Preferences Work HOT How Much Money Should I Raise?

Term Sheet 39

Term Sheet Technical Review Michigan Liquidation Preference 39

VC Cafe

OCTOBER 31, 2022

The numbers for the first nine months of 2022 show the extent of the slowdown in almost all parts of the Israeli tech economy, except in early-stage. The later the stage, the bigger the impact. Liquidation preferences – in addition to lower valuations, investors are looking for protective provisions.

Founder 173

Founder Technical Review Down Round Liquidation Preference 173

Berkonomics

AUGUST 29, 2013

Does the board declare dividends upon the preferred stock invested in order to increase the amount paid out to the preferred – at the expense of the common – shareholders, which usually includes the founder(s)?

Delaware 66

Delaware Liquidation Preference Liquidity Event Preferred Stock 66

Tim Keane

JANUARY 12, 2010

.   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.   A cumulative dividend can get to be very expensive and is not often a feature in early stage terms.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

techcrunch.com

FEBRUARY 25, 2010

This is probably why investors’ case for a company to sell early f ocuses exclusively on the founder : in most early-stage acquisitions, the liquidation preferences and deal-sweeteners only work for investors and founders. There is no liquidation preference, severance payment or earn out.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

Feld Thoughts

FEBRUARY 28, 2023

Conversion right: In Germany, there is generally no conversion right entitling the holder of preferred shares to convert them into common shares at any time. This may not seem like a big deal at first glance, but it has extensive implications under various aspects, such as the structure of the liquidation preference. edition.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

genylabs.typepad.com

SEPTEMBER 24, 2011

Before you agree to take equity in lieu of cash, you need to understand that any individual early stage start-up company equity is most likely going to be worthless. where your stock sits in the liquidity preference stack. what rights and preferences the founders and the other investors have. what your rights are.

Equity 40

Equity Technical Review San Jose Stock 40

Altgate

DECEMBER 16, 2010

@altgate Startups, Venture Capital & Everything In Between Skip to content Home Furqan Nazeeri (fn@altgate.com) ← More on Liquidation Preferences Happy Holidays → Where Do Tech VCs Invest? 11% of deals were Cleantech and most of those were early stage. Not sure how to explain that. Bookmark the permalink.

Liquidation Preference 59

Liquidation Preference Early Stage Venture Capital Later Stage 59

Professor VC

APRIL 1, 2010

I prefer the traditional face to face where you can interact with the other panelists and audience, but was the first panel I did wearing my favorite flannel penguin pajamas. I take CFO roles in early stage companies and participate on the management team during the early financings and business model development phases.

Term Sheet 32

Term Sheet Angel Investor San Jose Venture Capital 32

K9 Ventures

MARCH 23, 2011

It is in essence equivalent to being a Liquidation Preference that is typically seen in a preferred equity financing. In the early stages of the company the Board of Directors need not be about “control”, but it does need to be about learning and about discipline. Where are you going?

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Both Sides of the Table

SEPTEMBER 2, 2009

A friend of mine is a serial entrepreneur and is running a high-profile, early stage company in NorCal. I took money with a 3x participating preferred liquidation preference with 8% compounded interest annually. I believe this is wrong. Let me start with a couple of stories. He’s been at it since 2005.

Founder 329

Founder Liquidation Preference Term Sheet Participating Preferred 329

VC Adventure

AUGUST 30, 2010

I think the answer to these questions are that 1) it’s not at all clear that this trend is as definitive as Graham suggests; 2) it’s a mixed bag for entrepreneurs (more positive in the short run, potentially negative in the long term); and 3) it’s clearly not a positive trend for early-stage investors. Conclusions?

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103

Spencer Fry

APRIL 17, 2017

But as an early stage startup, accountability is so important. As a bootstrapper, you have nobody above you on the cap table (note: investors sit above you in their liquidation preference), so it’s your way or the highway. Other than that, your accountability is to your savings, checking, and credit cards.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

Scott Edward Walker

DECEMBER 13, 2018

The acquirer is typically a large successful company, and the target is typically a failing early-stage startup. An acquihire is essentially the acquisition of a startup for its talent/team (rather than for its products or services). The appeal from the startup’s perspective is a “soft landing.”.

Founder 45

Founder Merger IP Liquidation Preference 45

Venture Chronicles

AUGUST 23, 2013

Furthermore, when it comes to planning the typical startup has the additional dynamic of being not well equipped to push back against investors who have an expectation of growth rates in the early stages that well exceed 100%. well a lot of things can derail the best laid plans.

Management 66

Management Startup Liquidation Preference Dilution 66

Hunter Walker

NOVEMBER 23, 2015

The problem was that so much of what I do as the leader of the org has some aspect of either confidentiality (like HR or M&A) or context that’s hard to explain (perhaps the early stages of a new product or technical direction), that I wound up eliding most of it.

Engineer 48

Engineer Liquidation Preference AJAX IPO 48

aweissman.com

JUNE 5, 2011

I am fascinated by the transformation that has occurred over the last five years in the funding of early stage technology companies, and the resulting transparency around this process.

Liquidation Preference 29

Liquidation Preference Angel Investor Incubator Early Stage 29

Altgate

MARCH 17, 2009

Raising Capital: 5 Reasons Convertible Debt Sucks HOT The Collapse of the VC Ecosystem & What It Will Look Like Post Recovery NEW 10 Tips On Negotiating With VCs NEW Dating…er…Fundraising Etiquette The Science & Art of Term Sheet Negotiation HOT How Liquidation Preferences Work HOT How Much Money Should I Raise?

Term Sheet 28

Term Sheet Due Diligence Liquidation Preference Dividend 28

Gust

MAY 24, 2012

By contrast, venture capital and angel investments normally take the form of Preferred Stock with rights and preferences set forth in the company’s Certificate of Incorporation and other governance documents.

IPO 159

IPO Equity Common Stock Stock 159

abovethecrowd.com

FEBRUARY 24, 2015

Most private company financings involve the use of preferred stock with liquidation preferences. These liquidation preferences give the investor a debt-like downside protection. In going public, all preferred shares are converted to common shares, and the pile of liquidation preferences goes away.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

Austin Startup

AUGUST 1, 2017

First, investors will sometimes be willing to take a higher valuation if it means getting a heavier liquidation preference. Should you accept a 3x liquidation preference with a $15MM valuation instead of a 1x preference at a $8MM valuation? If you’re confident you’ll get a huge exit, maybe.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48

dondodge.typepad.com

JANUARY 15, 2011

Entrepreneurs face some pretty tough questions at a very early stage. How much equity should I grant to early employees? Dont worry about giving up too much equity at an early stage. Community is more powerful than money or technology » August 11, 2007 How much equity for investors and employees?

Equity 40

Equity Employee Dilution Valuation 40