Both Sides of the Table

JUNE 14, 2010

A doctor friend of mine told me a long time ago that the credo of surgeons is “heal with steel.&# Of course if your profession is to operate on people you quickly look at situations as those that can be treated with an operation. Then there is the opposite problem, which is me. I obviously have my own biases.

Liquidation Preference 343

Liquidation Preference Chicago Operations Partner 343

Up and Running

MAY 21, 2015

By contrast, if your investor is getting preferred shares, the investor is probably exercising a disproportionate level of control and taking a larger share of revenue than you might otherwise think if you were just comparing the number of shares each party owned. Liquidation preference.

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

David Teten

AUGUST 21, 2019

There is a huge universe of compelling, growth-focused companies that operate outside of the technology world, and they sometimes don’t get the attention that they deserve from institutional venture equity investors.” . But this is the same for a VC round with a liquidation preference. Works for non-tech companies.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Up and Running

DECEMBER 30, 2015

Founders should pay attention to the liquidation preference in the term sheet to ensure it does not become detrimental to them in a less than favorable exit. Another funding option, a no-funding operating plan, or a M&A option is critical to getting the terms you need in the timing you want. Better yet, get legal counsel.

Due Diligence 84

Due Diligence Valuation Liquidation Preference Redemption 84

K9 Ventures

JUNE 5, 2015

So while the infrastructure cost and startup costs may have declined, the operating costs have increased. The thinking is that since these companies will always be valued higher than the liquidation preference of the investment, therefore there is downside protection, and so they’re only playing for the upside.

Seed Stage 48

Seed Stage Venture Capital Early Stage Valuation 48

Scott Edward Walker

JULY 7, 2011

Finally, founders should watch-out for unusual redemption rights, such as a “MAC” redemption pursuant to which investors are given the right to redeem their shares if the company “experiences a material adverse change to its business, operations, financial position or prospects.” This is a non-starter.

Term Sheet 49

Term Sheet Redemption Venture Capital Preferred Stock 49

abovethecrowd.com

APRIL 20, 2016

As discussed above, these terms can cleverly fool the inexperienced operator, because they are able to “meet the ask” with respect to cover valuation, and the accepting founder does not realize the carnage that will come down the road. This is uncharted territory.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Venture Chronicles

AUGUST 23, 2013

They are a sounding board and provide critical objective voice on strategic subjects, but an investor is far too removed from the day-to-day decision making to be useful in an operational capacity, and if they are involved in the day-to-day then the are no longer simply investors.

Management 66

Management Startup Liquidation Preference Dilution 66

Growthink Blog

MAY 23, 2011

By definition, companies that receive venture capital cannot fund their businesses from operations, and thus need to seek outside capital. It is driven by the following: • The Best Metric for the Health of a Company is Cash Flow. Venture capitalists Have Very Different Objectives than Angel Investors.

Angel Investor 112

Angel Investor Venture Capital Sweat Equity Cram Down 112

Spencer Fry

APRIL 17, 2017

With no money, how do you expect to have great design, engineering, copy, marketing, content marketing, customer service, operations, and everything else that comes along with running a successful startup. You’ve raised. But that’s for another blog post.). Something has to give. Nobody can tell you what to do.

Bootstrapping 63

Bootstrapping Cap Table Liquidation Preference Cofounder 63

K9 Ventures

OCTOBER 19, 2015

” That is precisely how things seems to be operating in late stage private markets. As I’ve pointed out in previous blog posts , one of the reasons the late stage investors are comfortable with investing at lofty valuation is because all their investments come with liquidation preferences. ” .

Venture Capital 48

Venture Capital Liquidation Preference Valuation Portfolio 48

VC Adventure

AUGUST 30, 2010

Paul himself said in a March 2009 article : “When you hear people talking about a successful angel investor, they’re not saying "He got a 4x liquidation preference." " They’re saying "He invested in Google." Entrepreneurs like convertible debt for some obvious reasons.

Angel Investor 103

Angel Investor Early Stage Equity Valuation 103