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Understanding Liquidation Preferences




A liquidation preference is exactly what it sounds like, priority treatment for certain stockholders upon the liquidation, sale, merger, IPO or dissolution of a company.  It is a typical Series Preferred Stock right in venture financing transactions.  As I’ve stated in earlier posts, I believe that liquidation preferences are a top negotiating priority at the term sheet stage (I actually believe that this provision [...]

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Should you Take Money from a Strategic Investor?




The fact that anyone is offering you money is a good thing, at least in times like these.  But wipe the smile off your face and realize that you have some tough decisions ahead of you - you need laser focus!  Not all money is good money, or smart money for that matter.  This issue is not [...]

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Let’s Talk Angel Investors




What are Angels?  Angels are individuals that invest their own personal money in private companies, typically at a very early stage.  They are generally Accredited Investors under Reg D of the Securities Act of 1933 (meaning they have a net worth of at least $1M or that they made more than $200k the past three [...]

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Q2 2009 Venture Financing Term Trends




Much thanks to Cooley Godward Kronish LLP and Fenwick & West LLP for their recent reports on Q2 2009 venture financing term trends.  This is a long post, but full of info helpful to people in the venture deal space. My summary:  The typical round in Q2 2009, irrespective of series, was most likely a down or [...]

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Some Interesting Articles (7/28/09)




I really enjoyed Seth Godin’s short entry entitled The Reason Riding a Unicycle is Difficult.  In fact, I generally enjoys his entries – as he posts often and even the short ones can be packed with thoughtful ideas.  Back to the entry – I can really appreciate his view of the binary nature of riding [...]

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Negotiating Term Sheets: Should Entrepreneurs Focus on Valuation or Everything Else?




To some, liquidation preference may sound like a bankruptcy term of art and drag along rights may sound like a move in mixed martial arts.  Venture finance term sheets consist of many unique terms and moving parts, some of which will sound foreign to an entrepreneur raising outside capital for the first time.  Whether by design or misfortune, however, [...]

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Wilson Sonsini Term Sheet Generator




Wow!  How much press can this thing get in the venture community?  Lots – and I think that was the whole point. Of course, I am talking about WSGR’s term sheet generator which was launched publicly a few weeks ago.  If you read WSGR’s web site, you get the impression that this tool is only part of a [...]

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