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VC investors: Don’t be greedy even if you can.

Berkonomics

Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. Promissory notes come before any equity, and most late equity investments come before early equity investments, even of the same class of security.

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

Startup Company Lawyer

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70
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WHAT ARE SUPER PRO RATA RIGHTS?

Scott Edward Walker

First let’s discuss pro rata rights (sometimes referred to as “participation” or “preemptive” or “right of first offer/refusal” rights) – which investors will typically request in connection with any venture capital financing. I liken it to participating preferred — which founders also do not typically understand until it is too late.

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Startup Equity For Employees

www.payne.org

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 7 Salary vs Equity. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. Salary vs Equity. 3 Dilution.

Equity 56
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Avoid Offensive Liquidation Preferences

The Startup Lawyer

In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. A liquidation preference is the amount that must be paid to a preferred stock holder before any sale proceeds may be paid to the holders of common stock (i.e., founders, option holders, etc.).

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Unicorn deals – not that heavily structured

The Equity Kicker

However, few of the deals went beyond a simple 1x non-participating preference share. I always wondered if companies were accepting multiple liquidation preferences in exchange for high valuations, but that was only the case in 3% of the deals analysed.

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Startup Financing: Overview of Preferred Stock

Early Growth Financial Services

Today, we’re tackling participating versus non-participating preferred stock, a fundamental economic term in VC deals that goes to the heart of the business agreement between investors and management in connection with a sale of the company. Participating versus non-participating: what’s the difference?