Both Sides of the Table

DECEMBER 11, 2022

We had nascent revenues, ridiculous cost structures and unrealistic valuations. Within 5 years I was on the board of real businesses with meaningful revenue, strong balance sheets, no debt and on the path to a few interesting exits. Until we weren’t. 2001–2007: THE BUILDING YEARS The dot com bubble had burst. The tide has gone out.

Valuation 466

Valuation San Francisco Ratchet Liquidation Preference 466

Agile VC

APRIL 17, 2011

How They Make Money: Majority of Kayak’s revenue actually comes from advertising on their site (55%), not lead generation or referral fees to travel suppliers as you might think (more on this below). Financial Snapshot: 2010 Revenue: $170 million. Revenue growth: 51% YoY (2010), 1% YoY (2009), 131% YoY (2008).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

SEPTEMBER 18, 2014

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.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

David Teten

AUGUST 21, 2019

Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

abovethecrowd.com

FEBRUARY 24, 2015

As a result, a “late-stage” financing is no longer reserved for high-revenue, pre-profitability companies getting ready for an IPO; it is simply any large round of financing done at a high price. Lost in this conversation are the dramatic differences between a high priced private round and an IPO.

IPO 40

IPO Liquidation Preference Valuation Technical Review 40

Both Sides of the Table

MARCH 1, 2016

At the Upfront Summit in early February, we had a chance to have many off-the-record conversations with Limited Partners (LPs) who fund Venture Capital (VC) funds about their views of the market. In bad markets, they can be wiped out by recaps and liquidation preferences unless they save enough reserves to protect their positions.

Venture Capital 150

Venture Capital LP Silicon Valley Marketing 150

Both Sides of the Table

APRIL 14, 2010

That means that the likely have a minimum of $15 million in liquidation preferences. It will usually be higher because the liquidation preference has a dividend so if the deal is long in the tooth assume that the liquidation preference might be $20-22 million. Take liquidation preferences head on.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289