View from Seed

JANUARY 13, 2021

It’s that when things go south, seed funds will have a hard time defending themselves against larger funds that might do a recap or put in a pay-to-play. When we have been converted to common or very deeply diluted from a pay-to-play, the companies have either failed anyway or were not blockbuster outcomes.

Dilution 399

Dilution Later Stage Portfolio Technical Review 399

Feld Thoughts

JULY 14, 2015

It usually happens in a later round, when the company is in fact worth much less than the liquidation preference overhang and insiders use a pay-to-play and a low valuation to reset the preferences and the cap table. and the investors, who put up $1m in a convertible note, get 0.1%. Sure – it happens.

Recapitalization 70

Recapitalization Pre-Money Valuation Post-Money Valuation Angel Investor 70

Babbling VC

AUGUST 27, 2010

The concept of "pay-to-play" hadn't quite sunk in with him. Ultimately, the company was forced into bankruptcy as the investor syndicate couldn't come to terms on time. Yet, he wanted all the rights as if participating in the round. So, after pissing off management, he started pissing off his co-investors.

Bankruptcy 62

Bankruptcy Syndication Syndicate Pay to Play 62