Before we start a discussion on the different terms of a venture capital financing, it is important that every startup seeking VC financing understand the basic language of valuation. What does the VC mean when he says that he is ready to make an investment based on a “pre-money valuation of $8 million” or a […]
A Sample Term Sheet for a Venture Capital Financing in a Technology Startup Involving Series A Preferred Stock
To set the ground work to begin a series of posts on the numerous different terms in a typical venture capital financing involving the sale of preferred stock, below is a sample term sheet to get us started. Some of the terms may not be necessary or appropriate in a certain financing, but, at least, this […]
What is liquidation preference?
A liquidation preference gives the preferred stock the right to get paid before the common stock. It sets forth the order of return to the investors triggered by certain events such as a liquidation, dissolution, merger, acquisition or sale of all, or substantially all, of its assets. The liquidation preference outlines who will get paid […]
How do you determine valuation for a technology startup?
Understanding the valuation language: Pre-money vs. Post-money valuation Before we can start any meaningful discussion regarding venture capital for startups, it is very important that every startup understand the language of valuation. What does the VC mean when he says that he is ready to make an investment based on a “pre-money valuation of $8 […]