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. The key for entrepreneurs to understand is whether it’s a “full ratchet” or a “weighted average ratchet.” Convertible notes have full ratchets.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

MAY 30, 2015

This is called a “full ratchet,” which is also historically a term that VCs would be crucified for trying to get away with but I’ll avoid talking about that in this post.]. If a VC tried to do this to you on an early-stage deal they would get such a bad reputation that no other VCs or entrepreneurs would work with them.

Liquidation Preference 150

Liquidation Preference Ratchet Angel Investor Entrepreneur 150

abovethecrowd.com

APRIL 20, 2016

Examples of dirty terms include guaranteed IPO returns, ratchets, PIK Dividends, series-based M&A vetoes, and superior preferences or liquidity rights. The reason these terms can produce returns by themselves is that they set the stage for a rejiggering of the capitalization table at some point in the future.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40