The Series A
Now let’s assume that it’s 2 years later and Sweet Co. needs to raise more money. Let’s assume two scenarios:
1.) Things are going great
2.) Things aren’t going so great
Up Rounds
Let’s assume that things are going great with Sweet Co. and the company raises money at an “up round” valuation (VC translation: pre-money [...]
Filed under: Round Raise Modeling | Tagged: Post-money valuation, Pre-money valuation, Series A round, Venture Capital | Leave a Comment »
Although investing and building companies is a hugely rewarding experience for VCs, the ultimate reason VCs exist is to generate a return to their limited partners (the guys that fund Venture Capital firms).
One way VC’s try to protect their investments is by usually purchasing Preferred Shares (vs. Common Shares that founders own). Owners of preferred [...]
Filed under: Returns Modeling | Tagged: Initial public offering, Mergers and acquisitions, Preferred stock, Series A round, Venture Capital | Leave a Comment »
In the previous example, we reviewed the concept of non-participating preferred shares. As a reminder, non-participating preferred shares give the VC the option to trade in those shares for their liquidation preference value.
However, there is a structure that is usually more beneficial for investors called Participating Preferred, which gives the investor the liquidation preference value [...]
Filed under: Returns Modeling | Tagged: Participating preferred stock, Preferred stock | Leave a Comment »
