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

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

The Startup Toolkit

NOVEMBER 4, 2011

Next, we check that we’re safe from any particularly onerous terms like participation preferred. In an early stage deal, you check the numbers to avoid getting exploited, but you make your decision based on the investors. What’s the dilution? Can I make those numbers bigger and smaller, respectively?

Term Sheet 31

Term Sheet Dilution Participating Preferred B2C 31

The Equity Kicker

JANUARY 25, 2016

Thirdly, in early stage startups, scale, or more precisely growth/momentum, is hugely important but if the unit economics are never going to add up then you don’t have a business. It’s worth remembering that there’s some game theory at work here.

Venture Capital 60

Venture Capital Angel Investor Startup Participating Preferred 60

The Startup Toolkit

NOVEMBER 4, 2011

Next, we check that we’re safe from any particularly onerous terms like participation preferred. In an early stage deal, you check the numbers to avoid getting exploited, but you make your decision based on the investors. What’s the dilution? Can I make those numbers bigger and smaller, respectively?

Term Sheet 20

Term Sheet Dilution Participating Preferred B2C 20

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. There are also legal differences: Registration Rights, for example, are not legally binding.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

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