Brisbourne: The Math Behind Anti-Dilution (With Examples)

Ask The VC

Nic covers narrow-based, broad-based, and full ratchet anti-dilution with real examples using real math. Fundraising anti-dilution brisbourne broad-based anti-dilution full ratchet fundraising narrow-based anti-dilution vc post of the dayWell – I fell off that particular horse. That would be the “I’ll blog daily about the best VC blog post of the past 24 hours.”

The Truth About Convertible Debt at Startups and The Hidden Terms You Didn’t Understand

Both Sides of the Table

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.”

Trending Sources

Model Cap Tables With VCHub

Ask The VC

Anti Dilution – Full Ratchet. A few days ago I answered a question on AsktheVC about modeling cap tables. After a quick email conversation with Jeff Boardman (founder of LearnVC ), I realize I had left his product off the list. Jeff has done a nice job building a site that both models a cap table and provides a lot of information to empower entrepreneurs both with educational resources and software tools.

Mentors 5/18: Listen Too

Feld Thoughts

I don’t go so far as to “think out loud” like some people I work with, but I regularly find myself talking too much and have to consciously ratchet it back to listen.

Should I give my seed investors anti-dilution protection?

Gust

What this investor is seeking is called “permanent, full-ratchet, anti-dilution protection”, and that is neither (a) in line with the market, nor (b) practical. Even if you were willing to give it to him, it is highly, highly unlikely to stand up beyond the next financing round, because there’s no way your next investor is going to take a dilution hit for this first one. That’s why anti-dilution provisions are typically only applicable to the next financing.

On the Square and Match IPOs and hopes for a correction

The Equity Kicker

They had a ‘ratchet’ which repriced their investment in the event of a down round to give them a 20% return. Match.com and Square both enjoyed strong first days after their IPOs yesterday. Match closed up 23% at a valuation of $3.5bn and Square was up 45% at a valuation of $4.2bn.

Basic Information on LBOs

Recent Buzzes - VC Experts, Inc.

When some LBOs failed because the debt burden was insupportable, the industry reacted by ratcheting down typical ratios of debt to equity and euphemistically relabeling LBOs to private equity The typical "buyout" is a noncontroversial device to descend the ownership of certain assets (held in corporate form) from one set of proprietors to another - a "plain vanilla" deal in today's jargon.

Inspired Ideas to Boost Employee Productivity During the Holidays

Up and Running

Ratchet up your company’s social networking posts. The busy holiday season can make it hard to stay focused at the office. Here’s how to keep your team productive during the holidays.

3 Ways To Make In-House Filing Less Taxing

YoungUpstarts

If your startup is eyeing international expansion early on, your tax compliance and planning needs, both home and abroad, immediately ratchet up. by Anjum Tunuli, c hief tax officer at Early Growth Financial Services.

Bad Notes on Venture Capital

Both Sides of the Table

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. This week. On the phone … Me: So, you raised venture capital? Him: Yeah. We raised a seed round. About $1 million. Me: At what price?

How to Keep Your Team Productive Around the Holidays

Up and Running

Gather your thought leaders together for a discussion of what you can do in the coming 12 months to ratchet up sales and blow the roof off your revenue stream. With the holiday season approaching, it can be hard to keep the office productive.

Anatomy of a Term Sheet: Conversion and Anti-dilution

VC Ready Blog

There are two types of price-based anti-dilution protection typically found in angel and VC financings: full ratchet (very investor favorable) and weighted average (less investor favorable). Full ratchet anti-dilution adjusts the conversion price of outstanding preferred stock to that of the stock being sold in the new offering, thereby putting the existing investors in the same position they would have been in if they had purchased their shares at the new, lower price per share.

Accepting Outside Investors? Here Are 5 Things to Watch Out for in Your Contract

Up and Running

The version of “anti-dilution protection” that most benefits outside investors is commonly called a “full ratchet.” As a middle ground on the “anti-dilution clause” you should be pushing for what’s called a “partial ratchet.”

Anti-Dilution Provisions - An Example

Recent Buzzes - VC Experts, Inc.

Full Ratchet when it comes to the effects of equity % held by early investors and founders. By VC Experts Analyst Team. Anti-Dilution provisions can be a key negotiating point when it comes to the Deal Terms of a new round of financing, especially in the presence of a. Down Round. Broad Based Weighted Average can be a more friendly provision as compared to. See how these terms can differ when it comes to the structure of the. Cap Table and also at exit in the Waterfall.

Bad Notes on VC

Gust

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. This week. On the phone …. Me: So, you raised venture capital? Him: Yeah. We raised a seed round. About $1 million. Me: At what price? Him: It wasn’t priced. We raised a convertible note. Me: With a cap?

The VC Market – 2015 and 2016

Rob Go

The ratchet protection put in place by the last round of investors in Square is just the tip of the iceberg, and is relatively benign relative to other structures that I suspect are out there. In October, we held our annual Limited Partners meeting at NextView. In addition to reporting on the progress of our funds and the exciting stuff happening with the portfolio, we shared some thoughts on the broader market environment for VC’s and venture backed technology companies.

Women CEOs Dish: 4 Secrets to Fast Growth

Inc Startups

These women entrepreneurs had already reached the $1 million revenue mark and had the potential to ratchet that up even further. Supercharged growth is all in your mind. Four women explain how changing your mindset can change your growth potential.

8 Simple Steps to Extreme Personal Productivity

Inc Startups

An extreme personal productivity day automatically ratchets your internal limits a little higher. How to turn an ordinary workday into an incredibly productive day - no programs, expensive tools, or fancy apps required.

Three Ways PR and SEO Can Be Best Friends

Duct Tape Marketing

In effect, it’s like a ratchet that will constantly wind up more tightly and thereby twist SEO and PR closer together until one day they aren’t just friends but they are one and the same. Three Ways PR and SEO Can Be Best Friends written by Guest Post read more at Duct Tape Marketing.

The Best Pruning Shears Makes Gardening Fun and Easy

Blogtrepreneur | Entrepreneur Blog

Gardenite Power Drive Ratchet Pruning Shears This heavy duty pruning shears has blades of heat-treated and hardened carbon, coated with non-stick Teflon. Ideal for trimming garden hedges and pruning trees this pruner has a ratcheting mechanism that provides increasing pressure as you cut. Gardening is an enjoyable pastime most especially if you have the right gardening tools to do the job.

Foster A Collaborative Sales Team: 5 Ways

Inc Startups

That led management to ratchet up the compensation scheme's complexity –- which, in turn, led sales people to ratchet up the ingenuity of their response. It's impossible to work together in a dog-eat-dog showdown. Encourage collaboration and you'll see huge sales growth for years to come. In the old days, seeing a sales team work was like watching sharks smell blood in the water and furiously bite everything around them.

Startup Outlook from Silicon Valley Bank

Growthink Blog

Its very charter utterly excludes the notion of fostering development, opting instead for a one-way ratchet that can only lead to longer, more costly development cycles with no improvement in real safety for efficacy.” “Our On Friday Silicon Valley Bank released a survey of 375 executives at startup technology companies in the 4 core venture capital investment sectors – Software/Internet, Hardware, Life Science, and Cleantech. Here is what they found: Tech. Execs. Are Bullish.

What's Going On In Your Customer's Head?

Inc Startups

If you are generally reserved but the other person is an extravert, try to ratchet up your enthusiasm, so you don't inadvertently appear indifferent. Use these nine techniques to account for how your customer's brain could be wired, and seal the deal. Since you're a reader of Inc.,

[Singapore] Shopify Partners SingTel To Grow Presence In Singapore

YoungUpstarts

The e-commerce space in Singapore has been ratcheted up by another notch as online shopping platform Shopify partners telecommunications provider SingTel to make available its services to businesses in the country.

The Outlook For Small Biz In 2014? The Sky's The Limit. Sort Of

Inc Startups

Clickstop sells ratchet straps. As usual, our Inc. 5000 folks are upbeat. But only, they say, if Washington cleans up its circus act. In the face of squabbling lawmakers, a government that seems to close for business every month or so, and an on-edge economy, two guys at our recent Inc.

How to Grow Without Losing What Makes You Great

Inc Startups

At the same time, people are so focused on ratcheting up the positive that they don''t bother to clear away the negative-- bad stuff that, left to its own devices, will invariably overrun the good.

How to build a strong business community

Escape From Cubicle Nation

Knowing that, I can take great advice about ratcheting up the value and pricing in my business, and apply it in a way that is consistent with a community builder. I push myself to continually challenge my assumptions about business.

Don’t let team politics get in the way of shipping great design

Design Staff

One approach is to ratchet up your value to the team. This article was originally published at Medium. Shipping great design work is a struggle. You can have expert-level knowledge of Photoshop, color theory, copywriting, grid systems, and branding?—?and and still consistently ship crap products. Things happen: colleagues meddle with your work, interfaces get implemented poorly, compromises cut to the bone, and great ideas fall to the cutting room floor.

Q2 2011 Non-Silicon Valley Deal Terms

Recent Buzzes - VC Experts, Inc.

is still the more popular choice as compared to Full Ratchet. By VC Experts Analyst Team.

Introducing New Lean Startup Practitioners

Startup Lessons Learned

Each MVP is like a ratchet tooth or belay anchor that keeps the work from going backward, while enabling me to generate greater momentum for the next, more ambitious reach.” Guest post by Lisa Regan, writer for The Lean Startup Conference. In building the program for this year’s Lean Startup Conference , we’ve tried to strike a balance.

Lean 20

On the Road to Recap:

abovethecrowd.com

Examples of dirty terms include guaranteed IPO returns, ratchets, PIK Dividends, series-based M&A vetoes, and superior preferences or liquidity rights. Why the Unicorn Financing Market Just Became Dangerous…For All Involved. In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.”

Best Hand Pruners Ideal for Your Gardens

Blogtrepreneur | Entrepreneur Blog

Lanier Garden Tools Ratcheting Pruning Shears It is considered as the best hand pruning shears because it can multiply your strength in cutting branches up to 1-inch thick. Pruning your grasses and bushes, as well as trimming your roses in the garden are some ways that can help you reduce stress. Pruning shears can definitely help you how to enjoy your life in the garden. These are a type of gardening tool that looks like a scissor and typically use for plants.

allensblog: Entrepreneurs Should NOT Answer This Question: "What.

Allen's Blog

" Smart VC's will ask (one or more versions of) this question repeatedly, ratcheting up the pressure (even if in a low-key tone of voice).  allensblog. Thoughts from a startup sherpa. Archives. Profile. Subscribe. « Triumph of Hope over Experience: In Bubbles, the Price-to-Sex-Appeal Ratio Exceeds the Price-to-Earnings Ratio | Main. Entrepreneurs: Make Two Presentation Decks » April 30, 2012.

Anatomy of a Term Sheet: Conversion and Anti-dilution

VC Ready Blog

There are two types of price-based anti-dilution protection typically found in angel and VC financings: full ratchet (very investor favorable) and weighted average (less investor favorable). Full ratchet anti-dilution adjusts the conversion price of outstanding preferred stock to that of the stock being sold in the new offering, thereby putting the existing investors in the same position they would have been in if they had purchased their shares at the new, lower price per share.

Raise Capital With The Skin You’re In: Blunt Truth from Don Charlton, CEO, The Resumator

David Teten

Yes, you like hip-hop, “urban” clothing and “ ratchet television”, but all that sinks you deeper into stereotypes. How do you raise capital for your company when you’re not in the traditional social circles of the money people?

Why Pessimists Win

Inc Startups

Ratchet down revenue by at least that much, adjust growth expectations that much, and budget 25% more for your fixed costs. Serial optimists, take note: The best thing for your business might involve throwing a big wet blanket on your bright-eyed predictions.

How To Craft Your Unique Selling Proposition (USP)

Entrepreneurs-Journey.com by Yaro Starak

In great detail, the ad explained what went on “beneath the dial&# with beautiful pictures showing dozens of interlocking ratchets, with wheels within wheels. In “The Social Network&# , the movie based on Facebook’s meteoric rise to prominence, my favorite line is when the young college students sit around a Harvard dorm talking about how fast their idea took off. FaceMash had just been coded, and the first few emails went out to friends.

Horse Trading

ithacaVC

” Or possibly, “Ok, I would ask for the same thing if I were you, but let’s lose that full ratchet anti-dilution protection… ” Anyway, I am sure you get the point. “Horse trading” is a bad phrase in the startup/VC community. It typically is used in the context of someone (often a VC) attempting to change deal terms between a signed term sheet and the closing of the investment.

Walker Twitter Highlights: November 9th – 29th

Scott Edward Walker

” A few solid responses: [link] “The only folks that win on this are the later stage investors who get the benefit of the ratchet…“ – @weschan [link]. I’m using Twitter as a form of micro-blogging to share interesting articles, blog posts and video clips relating to startups, entrepreneurship and legal issues. Below are my five most popular tweets (via bitly ) for the past three weeks.

What To Do When Your Trusted Employees Defect To The Competition

YoungUpstarts

But even worse than the cost of recruiting someone new to fill the vacancy when a key employee leaves, there’s one big, looming worry that’s sure to ratchet your anxiety up to critical levels: “She knows everything!”