Category: Terms

The liquidation preference can also have a cap if it is a participating liquidation preference: After preferred liquidation proceeds, preferred participates in liquidation proceeds on the common with a cap on participation at...

The term of the liquidation preference will almost always say that it is for the original purchase price (or a multiple of the purchase price) “plus accrued and unpaid dividends.” The addition of the “accrued and unpaid...

As mentioned in the “Liquidation Preference 101” post, liquidation preferences can either be participating or nonparticipating. A nonparticipating liquidation preference only gives the preferred stock a liquidation preference...

The price per share of the Series A Preferred Stock that the venture capital investor is willing to pay is equal to the pre-money valuation of the company divided by the total number of shares outstanding.Per share price =...

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...

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,...