The Startup Toolkit

NOVEMBER 4, 2011

Vision for B2B, sales-driven technology. Next, we check that we’re safe from any particularly onerous terms like participation preferred. Deal 1 is a sales-driven company. . $250k now, plus 2 tranches for another $1mm based on performance goals. 40% dilution for full round (roughly $2mm pre-money). Looks good.

Term Sheet 20

Term Sheet Dilution Participating Preferred B2C 20

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. 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.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

ithacaVC

DECEMBER 14, 2011

Sometimes, after getting back the LP, the preferred holder then converts to common and gets its prorata share of proceeds left after all LP has been paid (this is called participating preferred). One final background point, a “liquidation event” is a sale of the company and typically NOT an IPO.

Liquidation Preference 49

Liquidation Preference LP Preferred Stock Liquidity Event 49

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. 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.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Scott Edward Walker

JUNE 9, 2019

I liken it to participating preferred — which founders also do not typically understand until it is too late. Such right shall not apply to any public offering and will terminate immediately prior to a Qualified Public Offering. The post WHAT ARE SUPER PRO RATA RIGHTS? appeared first on WALKER CORPORATE LAW GROUP, PLLC.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Early Growth Financial Services

FEBRUARY 3, 2015

Today, we’re tackling participating versus non-participating preferred stock, a fundamental economic term in VC deals that goes to the heart of the business agreement between investors and management in connection with a sale of the company. Participating versus non-participating: what’s the difference?

Preferred Stock 28

Preferred Stock Stock Finance Participating Preferred 28

Scott Edward Walker

APRIL 9, 2012

When investors receive shares of preferred stock, they are typically granted certain significant control rights, including a Board seat and veto rights with respect to certain corporate actions (such as the sale of the company) pursuant to so-called “ protective provisions.”

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Altgate

DECEMBER 18, 2008

Say you raise $8MM at $17MM pre-money ($25MM post) with a 3x participating preferred. In that scenario your last round investors will get $24MM of that sale off the top (3x their $8MM investment). If the sale price goes up to $75MM, Common gets to split about $5MM in proceeds.

Liquidation Preference 31

Liquidation Preference Venture Capital Post-Money Valuation Participating Preferred 31

Startup Company Lawyer

FEBRUARY 21, 2010

Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless. If you can’t figure this out yourself, you should probably build a liquidation preference spreadsheet to model how liquidation preferences work depending on M&A transaction value.

Retention 31

Retention Liquidation Preference Employee Common Stock 31

ConversionXL

MAY 31, 2016

Furthermore, the same study found that an incredible 100% of participants preferred sites with sticky navigation bars, despite often not knowing why. Since mobile users are looking for immediate results and quick access to key data, 22% faster navigation is a big deal. Image Source.

Mobile 48

Mobile Conversion Design Participating Preferred 48

www.payne.org

SEPTEMBER 22, 2011

Ive seen companies with $75m of preference, and very frustrated common stockholders that realize the company needs to get acquired for $100m or more for them to start making any money. (To To keep things simple, Ive omitted many details for preferred stock, such as "participating preferred" mechanisms. 1% ownership).

Equity 56

Equity Employee Vesting Preferred Stock 56

ConversionXL

MARCH 19, 2012

Don’t delete negative reviews - they actually help sales if there are only a few of them. The researchers informed half of the participants that natural chickens were healthy but less tasty, and genetically engineered chickens were tasty, but less healthy. People gather information from mixed sources.

Social Media 129

Social Media Technical Review Arlington Clickthrough 129

ConversionXL

APRIL 17, 2019

They actually help sales if there are only a few of them and they’re politely worded. Researchers informed half the participants that natural chickens were healthy (but less tasty) and genetically engineered chickens were tasty (but less healthy). That said, don’t delete negative reviews.

Customer 132

Customer Social Media Arlington Media 132

ConversionXL

JULY 12, 2017

The best sales copy is full, complete information. Have a Prominent Sales and Specials Section. Around 60% say they are looking for a section that identifies sales and specials. Discount seeking behavior is set to continue, so thinking about having a dedicated “sales” section on your site. Product descriptions matter.

eCommerce 100

eCommerce Mobile Conversion Design 100

ConversionXL

JULY 12, 2017

The best sales copy is full, complete information. Have a Prominent Sales and Specials Section. Around 60% say they are looking for a section that identifies sales and specials. Discount seeking behavior is set to continue, so thinking about having a dedicated “sales” section on your site. Product descriptions matter.

eCommerce 95

eCommerce Mobile Conversion Design 95