Steve Blank

APRIL 26, 2022

Some even insisted that all prior preferred stock had to be converted to common stock. You just failed the ethical choice and forever ruined your reputation. For existing investors, sometimes it was a “pay-to-play” i.e. if you don’t participate in the new financing you lose. Stopping Cram Downs.

Cram Down 408

Cram Down Founder Venture Capital Recapitalization 408

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

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. This makes the existing investors extremely unhappy and tarnishes the market reputation of the company. Equity investment is the most popular and most talked-about avenue for startup funding. billion dollars in 2017.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Berkonomics

JANUARY 6, 2022

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. And that reputation will last for a long time in the entrepreneurial community. The order of liquidation or payout.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

Both Sides of the Table

APRIL 14, 2010

In straight preferences the investors only get this money in a “downside&# scenario as protection that they get their money back if your company isn’t successful. I wouldn’t work in this business long if I had a reputation for screwing over other investors to get a deal. Reputation. So what happens?

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

Berkonomics

OCTOBER 1, 2015

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. Further, preferred stock holders can be recipient of accrued dividends in a sale or liquidation.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

ithacaVC

APRIL 5, 2011

One rule of simple cap tables is to issue “normal” stock to founders (common stock only) and investors (typically preferred stock, but sometimes common stock to early friends and family). I stress that the offer is from a real investor with a good reputation. Seems like a win-win.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45